VocationalTraining Vocational Training

March2009

ExecutiveSummary
Privatesector EstimatedworthUSD1.6bnin2008 Growthof25%p.a.toreachUSD4bnby2012 English language training is the largest segment followed by Financial Services Retail and IT EnglishlanguagetrainingisthelargestsegmentfollowedbyFinancialServices,RetailandIT Governmentencouragingprivatesectorparticipationalthoughlatterarenotregulated Drivers:DemandforskilledlabourinserviceandIT/ITeSindustries;inefficientpubliceducation system;competitivebusinessenvironment system; competitive business environment Challenges: Poorperceptionandlackofsupportfromfinancialinstitutions

Market

Drivers& Challenges

Trends

P t Partnershipsbetweencorporatesandvocationaltraininginstitutes hi b t t d ti l t i i i tit t Publicprivatepartnerships(PPP)forgovernmentownedIndustrialTrainingInstitutes(ITI) Risingdemandforonlinetrainingmodulesandcorrespondencecoursesinlanguagetraining PE/VCfirmsbullishonIndianeducationsector;investinginvocationalinstitutesaswell AhighlycompetitivemarketwithplayersfocusingonspecificareasandexpandingacrossIndia Majorplayers:

English VETA EnglishCenter FinancialServices ICA IFBI Retail IIRT K10 InformationTechnology NIIT Aptech Aviation/Hospitality Frankfinn AirHostessAcademy

Competition

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MarketOverview Drivers & Challenges Drivers&Challenges Trends Competition KeyDevelopments

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Indianeducationsystemcomprisesofformalandinformal networkofeducationalinstitutes
IndianEducationSystem

FormalEducationSystem

InformalEducationSystem

Schools(K12)

Professional Colleges*

Pre Schools

Coaching Classes

Vocational Training

Public

Private

Public

Private

Multimedia inschools andcolleges

Books

UnderthepurviewoftheMinistryofHumanResource Development No central governing body for K12; Ruled by state boards/ NocentralgoverningbodyforK12;Ruledbystateboards/ ICSE/CBSE/InternationalBoards Highereducationcomprisesgraduate/diploma/ professionalcoursesregulatedbyUniversityGrants Commision(UGC)andAllIndiaCouncilofTechnical Education(AICTE) ( )
Note:*GraduateandPostgraduatecourses

InstitutesundertheGovernment:Regulatorycontrol remainssolelywiththeMinistryofLaborandEmployment remains solely with the Ministry of Labor and Employment Institutesundertheprivatesector:Noregulationsinterms ofestablishment,standardsmaintainedandcoursefee charged

VOCATIONALTRAINING INDIA.PPT

Thegovernmenthasplayedanimportantroleindevelopingthis marketbyprovidingfinancialandinfrastructuralsupport
GoverningBody DirectorateGeneralof EmploymentandTraining undertheMinistryof LaborandEmployment

Institute

Publicsectorundertaking: IndustrialTrainingInstitutes(ITIs) 1913 suchinstitutes Twoyearcourses: Dairying,farmmachineryandequipment Accountingandauditing Electricaltechnology,airconditioningand g refrigeration XRaytechnician,healthcareandbeauty Preservationoffruitsandvegetables, foodservicesandmanagement Studentsin11 and12 standardin Students in 11th and 12th standard in schoolsaffiliatedtoCentralBoardof SecondaryEducation

Privatesectorundertaking: IndustrialTrainingCenters(ITCs) 3552 suchinstitutes

Certificatelevelcoursesoncraftstraining Engineering:
ManufacturingSector 22 ServiceSector 27

Courses

NonEngineeringTrades: N E i i T d
Manufacturing 8 ServiceSector 41

Applicability

Studentsleavingschoolaftercompleting anywherefromgrades812

NationalCouncilforVocationalTraining(NCVT)andCentralApprenticeshipCouncil(CAC)areadvisorybodiesandcreatepoliciesfor National Council for Vocational Training (NCVT) and Central Apprenticeship Council (CAC) are advisory bodies and create policies for developmentandalsomaintaintrainingstandardsattheinstitutes

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Theprivatevocationaltrainingmarketisinitsnascentstageand ishighlyfragmentedwithstronggrowthprospects
Overview
Vocationaltrainingmarketisestimatedtobeworth USD1.6bnin2008 Expectedtogrowat25%CAGRtoreachUSD4bnby 2012 Adevelopingmarketwithstrongopportunityfornew players P i t l Privateplayersoperatefreeofanyregulationsi.e.no t f f l ti i governing/regulatorybodies

MarketSizeandGrowth
USD mn
4,000 4 000 3,000 2,000 1,000 0 2,030 1,624

+25%
3,180 2,540

4,000

2008

2009e

2010e

2011e

2012e

PrivateEducationIndustry(USD40bn)
2% 3% 4% 2% 4% 2% 12% 49% K-12 Professional colleges Tutoring Test preparation Vocational training Stationery
17%

MarketSegmentation
3% 28% 14% English Training Financial Services Retail IT Airlines 20% 26% Others

9%

Child skill development Pre-school

E-learning etc Note:Corporatetrainingprogrammesnotincludedinthisreport

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MarketOverview Drivers & Challenges Drivers&Challenges Trends Competition KeyDevelopments

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Driversandchallenges

Drivers
Demandforskilledworkforce increasingwiththegrowthinservices sector StrongdemandfromtheITboom Inefficiencyinpubliceducation system Increasinglycompetitivebusiness i l ii b i environment

Challenges
Individualsperception Lackoffinancialinstitutionssupport

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Growthinservicessectorincreasingthedemandforskilled workforce
Demandforskilledlaborincreasingwiththegrowthinvarioussectors
Highgrowthinservicessectorwillgeneratedemandforaskilledworkforceandisexpectedto boostdemandforenhancedtechnical/softskilltrainingprogrammes
%
30 20 10 0 2001-02

Impact

Growth in Services Sector Growth in GDP

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

Growingemploymentlevelsandtheneedforhighefficiencywilldemandadequatetraining Sector Airlines Hotels Retail FinancialServices Direct FinancialServices Agents Employment 2008 60000 70000 880000 220000 600000 2011e 269528 192090 3953070 541283 1476225 CAGR(%) 65 40 65 35 35

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HugerequirementfortechnicallyskilledindividualsintheIT sectorwillbenefitplayersinthemarket
DemandduetotheITboom
ConstantlygrowingdemandforalargeworkforceisexpectedtoenhancetheITtrainingmarket whichisvaluedatUSD224mn WorkforceDemandedbytheITsector
+22% 1.6 0.8 1.1 1.3 13 2.0 2.2

Impact

mn
2,500 2,000 1,500 1 500 1,000 500 0

2004

2005

2006

2007

2008

2009e

ThenumberofnonITgraduatesemployedintheITsectorhasbeengrowingfasterthanthe numberofITgraduates. Thiscreatesanopportunityforprivateplayersofferingcomputercoursesincludinghardware g, p g andsoftwaretraining,computernetworkingandmultimedia DemandforEnglishlanguagecoursesalsoincreasingwiththegrowthinITEnabledServices (ITES)andBusinessProcessOutsourcing(BPO)sector

ITESandBPOsectorconstitute67%ofthetotalITindustryandwitnessedgrowthof33%from200408

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Inefficientpubliceducationsystemandcompetitioninthejob marketwilldrivevocationaltrainingprogrammes
Inefficiencyinpubliceducationsystem
Lowenrollmentsandhighdropoutratesacrossvariouslevelsoftheeducationsystemhasledto inefficiencyinthesupplyofworkforce Grade Grade912 Grade68 Grade15 DropoutRate%) 62 50 29

Impact

80%ofthegraduatesingeneralstreams(BSc/BA)areunemployableastheylackspecificskills Inefficienteducationsystemiscreatingawarenessamongstudentsregardingimportanceof channelizedskillbuilding

Increasinglycompetitivebusinessenvironment
Thedynamicnatureofthebusinessenvironmenthasmadeitimperativeforindividualsto developtheirskillsetsinordertocompeteeffectively Prospectiveandexistingemployeescontinuouslyworkonenhancingtheirskillsetsas productivityisdemandedfromthetimeofinduction Corporatesacrossindustriesareinterestedinupgradingtheskillsetsoftheiremployeesatall levelsinordertocompetewiththeirglobalcounterparts

Impact

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Existingperceptionamongindividualsregardingvocational training..
Individualsperception
ThelevelsofvocationalskillsimpartedtotheworkforceinIndiacomparespoorlywithother countries Shareoflabourforcereceivingvocationaltraining
%
100 80 60 40 20 0 8 25 96 85 86 88

Impact

India

Korea

Japan

Germany

Canada

Mexico

Individualsprefertoinvestintraditionalformsoflearninginordertoattainemploymentrather thanusingvocationaltrainingasaroute g g IndividualsarenotkeenonvocationaltrainingcoursesasadiplomacourseinIndiaisnot comparabletoadegreecourseatthetimeofemployment

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..andlackofaidfromfinancialinstitutionsactingasabarrierto growth
Lackoffinancialinstitutionssupport
Financialinstitutionslikebanksprovidefinancialsupporttothestudentsfortakingadmissions intheformaleducationsystemlikecollegesanduniversities Financialsupportisnotavailabletostudentsinterestedinenteringvocationaltraining programmesforwhichinstituteschargeahugefee

Impact

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MarketOverview Drivers & Challenges Drivers&Challenges Trends Competition KeyDevelopments

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KeyTrends

PE/VCfirmsshowinginterestin educationsector

Partnershipsbetweencorporates andinstitutes

Trends

Demandforonlineand correspondencecourses

Governmentencouragingpublic privatepartnerships

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Vocationaltrainingmarketwitnessingtieupsbetween corporatesandinstitutesforimpartingspecializedtraining
Partnershipsbetweencorporatesandtraininginstitutes
Corporatehouseshavebeguntoformassociationswithprivateplayersinthissegmentto imparttrainingtoprospectiveemployees
Thisallowscorporatestoimpartcustomizedhighqualitytraining Initiativestakenby corporatesinorder toscaleprofitability

Somesuchassociations Finance
AnarrangementbetweenICICIandManipalUniversitytoformICICIManipalAcademy(IMA)whichholds aoneyearcourse,sponsoredbyICICIandguaranteesemploymentafterthecompletionofthecourse. a one year course sponsored by ICICI and guarantees employment after the completion of the course ThestudentscompletingthecoursewillberecruitedasAssistantManagerBand1gradeintheBank InstituteofFinanceBanking&Insurance(IFBI),formedbyNIITwithequityparticipationfromICICIBank, haspartnershipswithICICISecurities,HDFCBank,KotakMahindraBank,YesBank,ICICILombardand Infosys

Aviation
FrankfinnInstituteofAirhostessesTrainingenteredintoatwoyearcontractwithAirDeccaninApril,07 tobethesoleinstitutionfromwhichthecabincrewforAirDeccanwillbeselected

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Governmentfocusingonprivatepartnershipstodevelopvocational institutes;Demandforonlineanddistancelearningincreasing
Governmentencouragingpublicprivatepartnerships(PPP)
TheCentreapprovedPPPschemeinordertoupgrade1396ITIs,whichareinstitutes developmentbythegovernmentandimpartvocationaltraininginvariousfields Educomp,oneoftheleadingplayersinthevocationaltrainingindustry,hasbeeninstated withtheresponsibilityofrunning18ITIsand12skilldevelopmentcentersinGujarat Underthe11thPlan
INR310bnhasbeenallocatedfortheNationalSkillDevelopmentProgram It also incl des the establishment of 250000 ocational schools r n thro gh PPP Italsoincludestheestablishmentof250000vocationalschoolsrunthroughPPP Privatesector ropedinforbetter roped in for better executionof vocationalcourses

Increasingdemandforonlinetraininganddistancelearning
DemandforonlinecourseshasgrowninIndiawiththeincreaseinbroadbandpenetration
VetaBestisanonlineprogramlaunchedbyVETAfortrainingintheEnglishlanguageforstudentsunableto accesstrainingcenters EnglishCenterisanothersuchinstitutionthatoffersonlinetraininginEnglishlanguage Institutesareina positiontotapinto awideraudience

Institutes are capitalizing on the requirement of distant learning courses who are often unable Institutesarecapitalizingontherequirementofdistantlearningcourses,whoareoftenunable toattendlecturesduetoothercommitments(education/employment),byprovidingselfstudy materialsalongwithonlineassessmentandsupport
RusselslaunchedtheirdistancelearningcoursefortraininginEnglish

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Vocationaltrainingmarketattractingprivateequityinvestors
IncreasedfocusofPE/VCfirms
PrivateequityplayersarebullishoneducationsectorinIndia Withintheeducationsector,privateequityfirmsarefocusingonunregulatedinformalmarket likevocationaltraininginstitutes,coachinginstitutesetc Date
Jan2009 Apr2008 Oct2007 May2007 Privateequityfirms aretappingthe unregulated vocationalinstitute market

Investor
IntelCapitalandHelionVentures ZephyrPeacockManagementIndia SAIFPartners SAIFPartners

Target
GlobalTalentTrack WLC Veta ICAInfotech

%Stake
n.a. n.a. n.a n.a.

AmountUSD
n.a. n.a. 10mn n.a.

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MarketOverview Drivers & Challenges Drivers&Challenges Trends Competition KeyDevelopments

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CompetitiveLandscape(1/4)
Institutes Overview RevenueinINR mn(FY08) EnglishLanguage FocusesonEnglishlanguagetraining Numberofcenterstoincreaseto500by2010 Growingduetoamixofownedandfranchiseeoutlets Theyhavetrained2.1mnstudents MainpresenceisinDelhiwithfranchisesinPunjabandnearDelhi Imparted training to 1 5 mn students Impartedtrainingto1.5mnstudents Trainingdirectedtowardsapplicationincorporateandretail spheres Educatedover1mnstudents Trainingdirectedtowardsapplicationincorporateandretail spheres Financial ICA Foundedin1999 00,currently Founded in 199900 currently has350centersofwith30are owned Foundedin2006,haspresence in22locations 1200 Theyhavebeenfocusingonaccountsrelatedandsharemarket relatedcourses EnteredintoapartnershipwithHDFCbankfortrainingtheir students Th h Theyhaveprovidededucationto~5000students id d d i 5000 d BusinessFocus

VETA

Startedin1981,175centers

~800

BritishSchool ofLanguage of Language English Center Russels Komark

Startedin1975,20centers Startedin1995,30centers Startedin1986,currentlyowns 25andhasfranchised5centers 5 and has franchised 5 centers Startedin1996

NA ~100 70 NA

IFBI(NIIT venture) )

1200

Note:Thelistisnotexhaustive

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CompetitiveLandscape(2/4)
Institutes Overview RevenueinINR mn(FY08) Retail Indian Instituteof Retail Training K10 Collaborationswithotherretailinstitutestowardsdeveloping coursecontent BusinessFocus

Startedin2007

NA

Startedin2003,has32centers acrossthecountry

NA IT

Traininginretail,marketingandEnglish

NIIT

Startedin1981,currentlyhas 473centers

10,068

FocusedonITtraining,accountsfor90%oftheirrevenues Imperiaformanagementprogrammes EnglishlanguagethroughtheacquisitionofEvolv Corporatetraining,90%ofrevenueisaccountedforbytheUS 72%ofrevenuewasfromtrainingintheretailsegment 28%ofrevenuefromtraininginthecorporatesegment EnteredtheaviationandhospitalitybusinessviaAvalon Planningtodiversifyintothecorporatetrainingmarket Increasedthenumberoftrainersfrom35to100anditsacquisition ofSynergeticshasaddedtotheirexistingcontentlibrary

Aptech Computer Computer Education

Startedin1987,currentlyowns 10centers,inadditionthereare 350franchiseeand110other 350 franchisee and 110 other centersthroughwhichstudents canenroll

992

Note:Thelistisnotexhaustive

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CompetitiveLandscape(3/4)
Institutes Overview RevenueinINR mn(FY08) IT JetKing Jet King CMS Startedin1990,currentlyhas 120centers(104franchisees) Startedin1976,currentlyruns 60centers 390 230 Focusedonhardwareandnetworkingtrainingprogrammes PlansonexpandingtheirtrainingcenterstoChina&Nigeria Focusesonhardware,networkandITtraining BusinessFocus

AviationandHospitality Theircentersaccommodate~17000students TheyenteredintoastrategicalliancewithEdexcel,towards introducinginternationallyacclaimedandhighlyratedBTECHigher NationalCertificateinAviation,HospitalityandTravelManagement recognizedin110countries Currentstudentstrengthstandsat250 Expectedtohave25centersinIndiaby2010 Provideeducationalloanstoeligiblestudentsthroughtieupswith HDFC Offer BBA degree in aviation tourism and hospitality management OfferBBAdegreeinaviation,tourismandhospitalitymanagement Alsoofferoneyeardiplomainairhostesstrainingandground handling

Frankfinn

Startedin1993,currentlyhas 120centers

750

Kingfisher Training Academy

Startedin2007

NA

FlyingCats

Startedin2005,31centers

NA

Note:Thelistisnotexhaustive

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CompetitiveLandscape(4/4)
Institutes Overview RevenueinINR mn(FY08) Aviation/Hospitality AirHostess Academy Startedin1997,networkof40 centers NA Theircentersaccommodatebetween900011000students TeacherTraining EducomprunsitstrainingprogrammeundertheQUEST(Quality EducationforStudents&Teachers)brandname Th h Theyhavetrained965000teachersasofFY08 t i d 965000 t h f FY08 FormedpartnershipswithMicrosoftandWiprofortraining Governmentandruralschoolteachersinspecificmodules BusinessFocus

Educomp Ed

Startedin1994,has32centers , acrossthecountry

818

Note:Thelistisnotexhaustive

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MarketOverview Drivers & Challenges Drivers&Challenges Trends Competition KeyDevelopments

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KeyDevelopments
Date
Nov 2008

Development
NIITlaunchedeGURUWeb&Multimediacurriculumforschoolchildren,basedonworldclassAdobeCreativeSuiteof Products.Thiswasintroducedinordertoprovideacomprehensivewebandmultimediaeducationusingprofessional software s. software's. GlobalTalentTrackLtdisplanninganewventureinvocationaleducationwithPuneUniversityincollaborationwithCisco. Thetargetistoprovidehighqualitylearningopportunitiestoover500000annuallyby2012.Theinstituteplanson expandingthismodeltothreeotherStatesby2009. TheChiefMinisterofAssamurgedtheteaindustrytoprovidevocationaltrainingtotheiremployees.Thisinitiativehad beenforwardedsothatthelabourforceisnotdependentonteagardensforasustainablesourceofincomeandendure been forwarded so that the labour force is not dependent on tea gardens for a sustainable source of income and endure multiplerevenuegeneratingstreams. TheGujaratgovernmentislookingattheprivatesectortoimpartvocationaleducation.TheStategovernmentplanson providingbasicinfrastructure,suchaslandandbuilding,atpolytechnics,engineeringcollegesandindustrialtraining institutes,andfundupto50%orINR10mntowardsthecostoftrainingequipmentandmachinery.Thesectorsbeing coveredareautomotive,chemicals,engineeringandtextiles.Theyalsoplanonpartneringwithprivateplayersfor g g y p p g p p y technicaltrainingin22ITIs. AjointeffortbetweenAptechandComputerSocietyofIndiawasundertakentowardseducating250000intheITsector inChennaithroughComputerBasedTrainings(CBTs),onlinetrainingsaswellasinstructorledtraining. ACentrallySponsoredScheme(CSS)isunderimplementationtowardsthedevelopmentofnewIndustrialTraining Institutes(ITIs)intheNorth EasternstatesandSikkim.Themainobjectiveoftheschemeistomeetbothqualitativeand Institutes (ITIs) in the NorthEastern states and Sikkim. The main objective of the scheme is to meet both qualitative and quantitativeskilledandsemiskilledmanpowerrequirementforindustry,servicesectorandselfemployment.Theplanis toestablish22newITIsandstrengthen/modernize35existingITIsintheNorthEasternregion.

Oct 2008

July 2008

Apr 2008

April 2008 March 2008

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