upGrad Charts Three-Pronged Strategy to Tap Tier-2, -3 Markets; Shares Robust Franchise Expansion Plans

Amit Singh
Amit Singh December 16 2020 - 21 min read
upGrad Charts Three-Pronged Strategy to Tap Tier-2, -3 Markets; Shares Robust Franchise Expansion Plans
The higher education Edtech startup has devised a three-pronged strategy to expand presence in the Tier-2 and -3 markets through franchise expansion, tapping newer domain areas and offering career opportunities to learners

The up-skilling and higher education Edtech firm upGrad has charted an ambitious plan for its franchise and business expansion across the country. The company has devised a three-pronged strategy to expand its presence in the Tier-2 and -3 markets through franchise expansion, tapping newer domain areas, and offering career opportunities to learners.

The company has robust franchise plans to penetrate deeper into the smaller territories. It has encapsulated a large role for franchise partners to play in the sunrise sector of online higher education, which has an addressable market of over 100 million learners. “We have hardly scratched the surface by reaching out to 1-2 million learners and the opportunity is huge. In fact, the early adopters will reap the highest benefits while taking this segment to the next level,” shared Arjun Mohan, CEO, upGrad. “Franchise partners will be crucial to take our success-story further,” he added.

The higher learning startup has witnessed robust growth over the last 12 months owing to great momentum in the overall Edtech space as well as students’ preference for online learning due to Covid-19 induced restrictions. “We have observed 5-6 times increase in traffic to our online platform during the last 9 months, which reflected in over 50 percent QoQ growth in our revenues. We are looking to close this year at Rs 1200 crore by booking over 200 percent revenue growth,” disclosed Mohan.

upGrad has strengthened its Alumni base with almost a million learners in a short span of 5 years of its presence, while it is adding almost 6000 paid students every quarter on its platform. The company has on-boarded over 100 colleges and universities onto its platform to expand its courses and pave the way for online learning as the future of education.

Franchise Expansion

With its great business momentum, the company has expedited its franchise expansion in a big way. Despite entering into franchising in 2019-end, upGrad has added over 200 franchise partners over the last 9 months to take the total count to 250. In fact, the franchise ecosystem has started giving returns as the company expects over 10 percent of its revenues to be contributed from the partners in the current financial year.

According to the company, parents in smaller cities are quite different from their counterparts in metros and large cities in terms of their limited presence on social media. “Hence, to tap this audience we need to establish a physical presence in smaller locations. In addition, face-to-face interactions enable us to instill confidence in the parents about the benefits of the course and the customer support. As the course fee ranges from Rs 2-4 lakh, our franchise partners play a crucial role in sales, marketing, and on-boarding of the students,” highlighted Mohan. “Channel partners are in fact our extended arms to influence and convince people on the benefits of our courses as well as to deliver the overall customer experience,” he added.

He further disclosed that having prior experience in educational business helps a lot for being an upGrad franchise partner; however, entrepreneurship is the primary skill the company looks at for partners. He highlighted that franchise partners can earn 15-35 percent of the course fees as their margin for each student enrollment.

The company offers two models of franchising: Authorized Business Associate and Channel Partner. Authorized Business Associates acts as a representative of upGrad and are required to have an office space of 500-700 sq. ft in a commercial/semi-commercial location. The initial investment required for this model is Rs 15-17 lakh, which includes a franchise fee of Rs 5 lakh. With a 15-35 commission on sales, the company claims that Authorized Business Associates are able to recover their investments in a period of 6-8 months. On the other hand, the channel partner model doesn’t require any physical space and works solely on a commission basis.

New Domain Entry

upGrad has recently entered into the test preparation market with its acquisition of The Gate Academy (TGA) to bolster its presence in Tier-2 and -3 markets. Bengaluru-based TGA is one of the leading coaching institutes with 57 centers across the country and over 2 lakh learners enrolled for GATE and entrance tests for various government and PSU organizations.

The acquisition offers upGrad a non-linear growth opportunity in the new segment and deeper penetration into the semi-urban and remote markets. The company plans to invest over Rs 100 crore into the test preparation subsidiary and will be developing over 20,000 hours of content in multiple languages.

Career Opportunities for Online Learners

In a very recent development, upGrad has acquired the recruitment and staffing solutions firm Rekrut India to offer career opportunities for online learners. The Mumbai-based Rekrut India provides recruitment and staffing solutions through an extensive network of 100+ recruiting experts. Talking about the acquisition, upGrad Co-founders Ronnie Screwvala, Mayank Kumar, and Phalgun Kompalli, in a joint statement, said, “Rekrut will open the floodgate of career opportunities for upGrad learners. We are thrilled to take a significant step in making upGrad a career powerhouse for professionals. This move is integrally aligned with our company’s vision of powering career success for every member of the global workforce as their trusted lifelong learning partner.”

The Rekrut acquisition comes at a time when online education has started to gain greater acceptance with recruiters, thereby thawing the age-old offline-online perception divide when it came to hiring talent. Prior to Rekrut, upGrad’s in-house career services team was reaching out to around 100-200 hiring partners in a year and drove over 1000 career transitions in 2020, with an average salary hike of 44 percent. With Rekrut’s expertise and core business being driving placements, upGrad the company is confident to boost its current volume by 10-times and drive meaningful career outcomes for online learners.

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