on February 23, 2021
Spotlight on Online Education Gets Brighter
Online education programs have come a long way since their start in the early 1990s. The global online education market is projected to grow at a 5-year CAGR of 9.2% to $319 billion by 2025 according ResearchandMarkets, a market research firm. Deeper internet penetration across the world, growing adoption of cloud-based solutions coupled with significant investments in enhancing the security and reliability of cloud based education platforms, have set the stage for future growth. Service and content providers are bringing a large volume of educational content online, and AI and IoT technologies are further enhancing the user experience on these online education platforms.
Online education is stepping out of the shadows and into the limelight. There are many indicators that this pandemic is going to transform many aspects of life starting with the current educational system. In theory, lectures that require little personalization or human interaction can be recorded as multi-media presentations, to be watched by students at their own pace and place. Such commoditized parts of the curriculum can be easily delivered by a non-university instructor on Coursera and Udemy. For such courses, technology platforms can deliver the content to very large audiences at low cost, without sacrificing one of the important benefits of the face-to-face classroom, the social experience, because there is hardly any in these basic-level courses.
Filling the Skills Gap
In the U.S. 74% of hiring managers are concerned about the skill gap in the labor market and 48% have highlighted that candidates lack the skills needed to fill open jobs, as per a U.S. Chamber of Commerce study.
China, the most populous country in the world, is facing a similar problem due to a number of issues including greater focus on academic performance; often at the expense of high level vocational training and skills training. This has led to a shortage of skilled workers.
Likewise, 53% Indian of businesses could not recruit in 2019 due to a skill shortage for new-age jobs across sectors, as per International Labor Organization (ILO). This trend will continue to exacerbate and Indian businesses could be faced with 29 million skills in deficit by 2030 as per ILO estimates. Some IT companies, such as Tech Mahindra, have also claimed that roughly 90% of Indian engineering grads are unemployable.
Understandably, the onus for skill development has shifted industries that have invested in creating learning centers for employees. This is where Udemy, Coursera and LinkedIn Learning have emerged as essential tools in helping enterprises as well as students increase their skill levels and bridge the gap between a degree and getting employed and moving ahead in their careers.
Additionally, new-age startups such as Multiverse are upending the traditional 3-5 years of accreditation-focused terms at universities with a blend of apprenticeships and education providing highly relevant skills at top companies including Santander, Unilever, and KPMG. Companies pay Multiverse for access to a diverse pool of talent and the apprentices also get paid instead of piling up student loans for a regular university degree – 54% of college students take on debt. $1.57 trillion student loans were outstanding in the U.S. as of 2020. Multiverse trained 2,000 apprentices across industries including finance, media, tech, construction, and local governance in 2020. As opposed to job hunting after earning university degree, roughly 87% of its apprentices have stayed with the company post their apprenticeship where education and career go hand in hand from the outset.
“For too long there’s been a belief that university, supplemented by sporadic corporate training, is the only route to success. This model is fundamentally broken — too often failing to give people the skills they need and not spreading opportunity fairly across society” Euan Blair, Multiverse CEO and Founder.
ESG Investing Catching On
In an unprecedented push, some of the largest global investors, including Blackrock, Blackstone, Riverstone, and Chamath Palihapitiya, are leading the shift from an investment decision-based on a “growth at all costs” model to a more sustainable investment strategy. The renewable investment wave is underpinned on one hand by a commitment to establish a stringent accounting and reporting of sustainability data that is set to spur startup activity in renewable and green technologies. On the other hand, lending programs incentivizing a switch to energy efficient appliances will spur demand. The broader addressable market for decarbonizing the global economy is a massive $10 trillion market opportunity, as per the World Economic Forum.
Environmental, Social, and Governance (ESG) investing is gaining prominence among public market investors and venture capitalists. Disclosing ESG metrics along with the traditional financial metrics are not only essential but required to access progress. The metrics themselves are not as well defined as their accounting counterparts. That said, MSCI and Sustainalytics assign ratings to companies by assessing companies’ ESG practices. These ESG data providers and their ratings have enabled investors to evaluate and screen potential companies for investment. Additionally, in a move that will help in taking ESG reporting more mainstream, Bank of America and 60 other companies have committed to a new climate and sustainability-based reporting standard that is endorsed by the International Business Council and the World Economic Forum.
While ESG metrics are non-financial in nature, their impact on financials is undeniable and have been empirically proven. In terms of numbers, millennials comprised 23% of the global population, or 1.8 billion people, in 2020. It has become imperative for businesses to align themselves around this key consumer group that in 2014, was poised to inherit $30 trillion of wealth, as per EY data. As per a Morgan Stanley study, 90% of millennials believe generating an ESG impact is central to their investment strategy. They also form a large customer base as their purchase decisions are increasingly ESG values driven.
Pressure from investors, employees, and potential consumers has increasingly forced companies to incorporate ESG values in varying degrees. Nike, Adidas, Estée Lauder have been forced to improve workforce diversity. More recently, H&M, Primark, and Zara had to pay up for cancelled orders that affected the wages of 2.28 million Asian workers after facing widespread criticism.
Furthermore, investors are exerting their influence for greater adoption of ESG values among businesses. Owners are using ESG criteria for mitigating risk as well as managing reputational risks. As mentioned above, a well-defined ESG commitment can attract millennials as sustainable-conscious consumers. 95% of high net worth investors preferred sustainable investing, per a 2019 survey by Morgan Stanley Institute for Sustainable Investing. Accordingly, companies in fields such as weapons manufacturing, tobacco, alcohol, are attracting fewer VCs and PE funds. In an initiative led by Domini Impact Investments,
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