DC Discusses: Extraordinary growth and investment opportunities - could generative AI be the Y2K moment for continuous education?
Date
6 min read
In our latest DC Discusses article, Nitin Bhatia from DC Advisory Mumbai with over 16 years of experience in Education and Technology & Software, examines the extraordinary growth and investment opportunities of generative AI in these sectors.
DC Discusses examines major trends influencing deal flow worldwide.
Generative artificial intelligence (AI) algorithms, such as Chat GPT, which can be used to create new content, including audio, code, images, text, and videos, seems to be racing away as the defining technology transformation of our times. In a recently published article[1], Bill Gates noted AI as one of the two revolutionary technologies of his lifetime, the other being the Graphical User Interface in 1980.
Generative AI has reinforced and accelerated a trend that was already well underway – advances in technology are leading to a shortening shelf life of skills. As new skills requirements emerge, we expect the need for continuous / lifelong learning will increase.
Is generative AI the Y2K moment for Continuous / Lifelong Education businesses?
Apple and Microsoft ushered in the era of personal computers in the early 1980s, whilst companies including IBM Global Services, Infosys and TCS emerged to help businesses adopt technology for their processes. By 1995-1996, Y2K[2] became the defining business risk of the times, leading to IT services businesses gaining traction with large global customers racing against time to avoid a widely expected catastrophe with computers, when the date changed from 1999 to 2000. Infosys was a $18M Revenue company in 1995[3] and went public on NASDAQ in 1999 when its revenue touched $100M for the first time[4], an increase of more than five times in just four years, thanks in part to the Y2K work it was doing at the time[5]. IT services never looked back from that “lucky break”, and it is a $1.2TN annual revenue industry today[6], with the Indian IT industry taking about a fifth of that market!
It is easy to draw parallels between the IT services industry in 1999 and CEB in 2023. Delivery at scale and cost competitiveness may have ensured Indian IT players were big winners of the global IT spend explosion after 2001. Indian CEBs already deliver project intensive training virtually to thousands of students, with a highly competitive cost structure. They have lagged in global enterprise adoption and global go-to-market to date, but if generative AI proves to be CEB’s Y2K, we may see significant deal opportunities as another world class services business line emerges out of India over the next decade.
What does this mean for M&A?
Generative AI may prove to be a similar adoption accelerator for continuous education businesses (CEB). We expect employees will need to be reskilled to enhance their productivity or do additional tasks not yet automated. This would mean training and development of retrenched employees for new roles at an unprecedented scale. Finally, individuals will likely proactively seek to upgrade and retool to gain a career edge, avoid retrenchment, or learn new skills that are in demand.
This rush to get ready for a generative AI world may mean the market opportunity for CEB and EdTech could be several times larger than the US $ 450 billion it has been estimated to reach by 2028 [7]. As each industry will have unique use cases for generative AI, industry vertical skilling programs may have to evolve, in contrast to the majority horizontal skilling programs in play today. We expect a need for more application-oriented training and frequent feedback may dictate that these programs have a far higher synchronous delivery component.
To discuss the outputs in more detail, or for more information on generative AI in EdTech, please contact Nitin Bhatia >
References:
[1] Source: The Age of AI has begun - GatesNotes.com, 21 March 2023, Bill Gates
[2] Source: U.S. Urges Companies to Plan for Year 2000 Computer Bug, New York Times, 9 September 1997, John Markoff
[3] Source: Infosys annual report – ifosys.com, 1995
[4] Source: Infosys annual report – Infosys.com, 2011
[5] Source: India’s Y2K-Bug Busters May Lead Rally: Taking Stock – Bloomberg.com, 27 December 1999
[6] Source: International Data Corporation, Worldwide Semi-annual Services Tracker, 12 April 2023
[7] Source: imarc Impactful Insights, Edtech Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2023-2028 – PRESS RELEASE – digitaljournal.com, 21 April 2023
What to read next
India
Contact form
Thank you!
Your message has been received by DC Advisory so you'll hear back from us soon.
We collect your personal data if you sign up to receive news or get in touch with us. This is collected by third-party firms on our behalf. We have three separate lists:
- DealCloud - which we use as our CRM. DealCloud privacy statement is available here: https://www.intapp.com/privacy/
- SalesForce - which we use as our CRM. SalesForce privacy statement is available here: https://www.salesforce.com/uk/company/privacy/
- Spotler - which we use to send email marketing campaigns. Spotler privacy statement is available here: https://spotler.co.uk/privacy-policy/
Application form
Thank you!
Your message has been received by DC Advisory so you'll hear back from us soon.