The workplace is among the many casualties of the COVID-19 pandemic. Among the many pandemic-related challenges facing enterprises are those relating to the workforce, such as the Great Resignation*, the obsolescence of some job roles, and the need for new ones. In their scramble to fill positions and slow employee departures, businesses are seeking to enhance the “employee experience.” A key component of this is learning and development (L&D).

Market sentiment and estimates indicate the pivotal role L&D needs to play now and in the future.

We believe educational technology (EdTech) companies such as upGrad are well-placed to take advantage of these shifts in workforce skill profiles. How does a Mumbai-based higher EdTech company stand to benefit? Can it replicate its success beyond its home market? First, a brief consideration of upGrad’s history and growth trajectory is warranted.

upGrad’s holding company UEducation was founded in 2015 by Ronnie Screwvala, Mayank Kumar, Ravijot Chugh, and Phalgun Kompalli, with an initial investment of ~USD 15 million (INR 1 billion). Indian entrepreneur Ronnie Screwvala pioneered cable television in India and founded media and entertainment company UTV, which was acquired by Disney in 2013. Mayank Kumar is a venture capitalist with experience in the education sector. The founders’ vision was to provide flexible, digital-first, and industry-relevant learning solutions that encompass content, technology, and services, for students and working professionals aged 18 to 50–60.

After being bootstrapped since its founding, the company raised USD 120 million from Temasek at a valuation exceeding USD 600 million in April 2021—its first external fundraise. upGrad reached unicorn status just four months later, when it raised a total of USD 185 million from Temasek Holdings Ltd., the World Bank’s International Finance Corporation, and IIFL at a valuation of USD 1.2 billion.

The company has taken an inorganic approach to broaden its portfolio, making its first acquisition in 2016 (namely, Pyoopil Education Technologies, provider of a SaaS-based corporate training solution). upGrad kicked its expansion drive into higher gear in July 2021, when it allocated USD 250 million to acquire more businesses over the months following its April fundraise. Since then, the company made four acquisitions over the six months to January 2022.

upGrad doubled its learner base to ~2 million over 2020–2021, and reported an 86% YoY increase in revenue to ~USD 40.5 million (INR 3 billion) for FY2021, attributed to pandemic-driven demand for online education. Its blended revenue per learner saw a slight drop over the period from USD 22 to USD 20. The company is bullish about quintupling its registered users to 10 million by 2024, tripling its corporate client base to 3,110 by 2024 (from 1,000 in 2021), and recording revenue of USD 2 billion by 2026 on the back of an expanded product portfolio, more M&A, and international growth. The company has also announced its intention to go public by 2023.

Why is upGrad well-positioned to benefit from recent workforce trends to upskill and reskill? And what challenges does it face?

upGrad initially focused on helping working professionals upskill while they work. Since then, the company has broadened its offering to include degree programs, recruitment solutions, and corporate learning, mainly through partnerships as well as mergers and acquisitions.

upGrad’s product offering, which includes short-duration courses and degree programs, is well suited to meet the growing need for upskilling and reskilling in the workplace, stemming from individuals seeking to refresh their capabilities and from corporates seeking to retain (and motivate) their workforce and adapt to changing market conditions.

upGrad has expanded beyond its home market of India and into the North America, EMEA, and APAC regions. As of December 2021, the company’s second-highest number of learners hailed from the US (25%), one of its key growth markets, wherein it plans to expand even further through university collaborations, Ivy League certification programs, and graduate programs. In fact, upGrad expects international markets to contribute half of its revenue by 2023, up from 10% in 2021.

To this end, the company has appointed CEOs for EMEA and APAC (Saranjit Sangar and Zubin Gandevia, respectively), and a general manager for North America (Karan Raturi), with plans to double its US team to support further expansion.

upGrad is not the only Indian company seeking to establish an international presence. Mumbai-based Eruditus, a provider of corporate learning platforms for professional learning, upskilling, and reskilling, is also expanding globally, generating 80% of its revenue from international markets. It offers courses in multiple languages including Portuguese, Spanish, and Mandarin.

The bigger hurdle when entering the US is competing head-on with local players such as Coursera and Degreed. NYSE-listed Coursera has 92 million learners versus upGrad’s two million, generating 10x its revenue, while Degreed is 2.5x–3x upGrad’s size in terms of revenue and learners. Moreover, upGrad’s programs are priced on a per-course or degree basis, which differs from the pricing strategies of Coursera and Degreed, which offer annual memberships with unlimited access. Clients may view upGrad as being more expensive, and prefer an annual subscription amount that allows them to compare providers.

upGrad is certainly pursuing an aggressive growth strategy, bolting on new products through acquisitions and expanding its global footprint. The company expects these efforts to bear fruit in the form of learners (10 million by 2023) and revenue (USD 2 billion by 2026). However, the company’s increased spend on advertising and promotional activities in 2021 (an increase of 116% year-over-year) led to its net loss widening to ~USD 28 million from ~11 million in 2020. We believe its expansion into the North America and Europe markets will be the most challenging as it goes head-to-head with local players, and other Indian companies seeking to establish a presence. How successful will upGrad be in these markets? We'll have to wait and see.