Pearson bets on India and online learning

A couple business transactions announced this week are indicative of three important trends in learning:

1. The shift from print to personal digital services

2. The rise in direct-to-consumer learning services, and

3. The growing interest in and relative health of education investment in India and the US

India’s Economic Times reports, “there were two major private equity deals in the education space in June. Pearson invested around $12.5 million in TutorVista, which is into online tutoring. Also, Educomp and Pearson set up a 50:50 joint venture, where Pearson invested around $17.5million. The new venture company will be into vocational training.”

Business Line explains that, “While the Educomp joint venture will focus on the domestic education business, the TutorVista investment will focus on providing online tutoring for US students. It will be an offshore operation. As the single largest shareholder in the company, Mr Peter Cohen, CEO of Pearson Education’s US School Curriculum Group, will be appointed to the board of TutorVista.

Both deals indicate that Pearson is serious about the shift from print to digital learning services. They’re also bullish on India and see vocational training as a great recession opportunity.

While visiting schools in last three months I’ve seen more schools purchasing online tutoring as a cost-effective and flexible way to extend learning. With the Pearson investment, TutorVista should be better positioned to compete with US-based Tutor.com.

On the relative health of the education sector, ET continues:

Call it a new chapter for equity investors. Those who betted on education companies a year ago made ten times more return than those preferring the conventional route of investing in Sensex (Bombay exchange) companies. Big-ticket investors, including private equity players and high networth individuals (HNIs), have been betting on the potential of the sector as it has begun to witness actions from the government too. During the last one year, major companies—Aptech, CMC, Educomp Solutions, Everonn Systems India and NIIT—from the education sector gave a return of more than 10%, against less than 1% of return from the Sensex companies.

Private equity is attracted by the recognition that learning is vitally important to economic growth, a sector in transition, and less cyclical than other sectors. Over the next decade, smart private capital (augmented by the open content movement) will spur the shift from print to personal digital services.

We’ll increasingly see work-at-home Americans teaching Chinese to speak English with fluency and Indian tutors teaching American kids to factor polynomials.

The learning ecosystem—digital, direct, personalized learning—will develop with or without American schools. It creates new opportunities for schools (and states and companies) paying attention.