How Indian edtech players gave birth to a new crop of millionaire teachers

Rakesh Arora (name changed) was pursuing engineering from a small regional college in Kanpur, Uttar Pradesh, when he had to think about his next big move in life. With his brother encouraging him to pursue his interests, Arora found a side gig: teaching students preparing for competitive examinations at a nearby coaching centre that paid Rs 5,000 a month. Arora’s headline moment came when one of his students aced the coveted JEE Mains (Joint Entrance Examination for admission to the Indian Institutes of Technology) and got accepted into IIT Delhi, one of India’s premier engineering colleges. “Har koi chahta hai ki humara padaya hua bachha IIT jaye (Every teacher wants his student to get into an IIT),” he says.

Following this success, Arora realised that teaching was his true calling. He skipped his college placement process and instead joined a school. Now, he was earning Rs 15,000 a month. The happiness that came with being a teacher was sadly not enough to cover the costs of living. Arora started working for Aakash Institute (which was later acquired by edtech decacorn BYJU’S) at a monthly salary of Rs 42,000. A few years later, he left Aakash to launch his own coaching centre.

But then came the Covid-19 pandemic. His coaching centre shut down before it could properly take off. Arora admits that managing his day-to-day expenses was an uphill battle. Worse, he was threatened with eviction if he didn’t pay his house’s EMIs. That is when he started looking for alternative sources of income. Little did he know that the pot of gold lay just around the corner.

‘Arora sir’, as he is fondly called by his students, began creating and uploading instructional videos on YouTube. Initially, his videos were only viewed by those who already knew him, but eventually, they gained popularity among students throughout the country, particularly among those who were preparing for competitive exams. “From Aurangabad to Nagpur, students started writing to me about how my teaching pattern resonated with them. In the comments section, I would ask them which chapter they wanted to study next. They also gave me feedback on my videos.”

During the day, he would record the sessions, and then later that night, he and his brother would edit the footage and upload them to the video-streaming service. The next day, he would start filming videos for the next chapter. This routine went on for two to three months before the next breakthrough. Arora’s videos went from having 100 views in a week to 4,000-5,000 views each day. The bigwigs in his field took notice of his 140,000 Instagram followers. In November 2021, he was called by one of India’s leading edtech unicorns, which offered him a lucrative salary to join its team. Arora says he now makes Rs 1.5 crore annually.

And, his life has changed since he joined the edtech start-up. Now, paying his EMIs is a breeze and he intends to finish them off earlier than anticipated. He was also able to purchase a car for the first time ever: an MG Hector. His kids attend a ‘big school’ in Delhi, and he and his family can take frequent vacations to upscale locations. “Ab itna milta hai ki ab zindagi maze se nikal jayegi (Now I make enough to live comfortably),” Arora tells BT.

Not just Arora, many teachers in India are earning in crores now. This situation was unthinkable just a few years ago. But, what brought this change?

The Tech-tonic Shift

Teachers in our country have historically been held in high regard. But they were usually paid low salaries. Even today, according to interviews conducted by BT with a small sample of educational institutions, the median annual salary of teachers in secondary schools range from Rs 3.5-5 lakh for freshers and Rs 5-15 lakh for those with more than 10 years of experience. Those at the higher secondary level can expect to earn Rs 1-1.5 lakh a month. Besides low salaries, they also deal with difficulties like lack of benefits and job security. As many as 42 per cent of the teachers in India work without a contract, per Unesco’s State of the Education Report for India in 2020; and they earn an average monthly salary of less than Rs 10,000.

While education is considered a basic need and a springboard for success, there are only 9.5 million teachers in India at present, for more than 260 million students enrolled in schools, according to a report by edtech platform Ezyschooling.

While K-12 education still has a lot of support from the state and central governments, along with private schools, students preparing for competitive exams—whose numbers run into millions—have to rely largely on unaffiliated coaching centres running across the country. And this phenomena is what makes the segment so lucrative for edtech players, and in turn, for popular teachers. “The demand for material and content is the most for JEE Mains, NEET and UPSC, in that order,” the founder of an edtech unicorn company, requesting anonymity, tells BT.

Each year, approximately 11 million candidates take the JEE Mains exam, and 10 million appear for the UPSC exam. This shows, the founder adds, that aspirational parents place greater value in seeing their children get into top engineering schools over cracking the civil services exams.

Since the need for education is so great and the infrastructure for it is inconsistent, edtechs have a lot of room to grow and they have found a way to capitalise on this trend. A report by the India Brand Equity Foundation (IBEF, a trust set up by the government to spread awareness about Indian products and services) estimates that by 2025, the country’s edtech market will have grown from its 2020 valuation of $750 million to $4 billion, with a CAGR of 39.77 per cent.

The Breeding Ground

India is a hotbed for edtech companies, with big players like BYJU’S, Physics Wallah, Vedantu and Unacademy making waves in the industry. These companies have deep pockets, thanks to global investors like SoftBank, Tiger Global and Lightspeed Venture, to name a few. Edtechs have managed to rake in millions of dollars in funding rounds and many have even achieved unicorn status (a valuation of $1 billion or more). Bengaluru-based BYJU’S is the world’s most-valued edtech company ($22 billion as of May 2023), per data from Hurun India.

However, before the pandemic “edtech was a small ecosystem” in India. “Covid-19 accelerated the Indian edtech sector,” says Vidur Gupta, Co-founder of staffing firm Spectrum Talent Management.

During the pandemic, online communications became the lifeline that kept the world ticking while everything else was failing. Result: the edtech sector boomed. “Players started hiring aggressively, giving great compensations, and also focussed on tech and content development,” says Gupta.

Like Arora, many teachers become millionaires with the sudden surge in demand. English, Mathematics and Science teachers are the most in demand, according to experts; teachers who assist students in getting ready for competitive exams like JEE Mains, NEET, UPSC, and CAT also command higher salaries. To learn more about the pay structures, BT reached out to a few edtech companies. Only Noida-based Physics Wallah responded by giving insights into their methodology for hiring.

“As a leading edtech company, we recognise the vital role that teachers play in delivering effective education and learning outcomes. To ensure the quality of our teaching, we implement a rigorous selection process that adheres to high standards,” says Satish Khengre, Head of HR at Physics Wallah. He explains that while selecting teachers, the edtech takes into account several factors, including student feedback, a demo of effective teaching methodologies, written exams to understand the depth of knowledge and interviews with subject matter experts.

To attract talent, the most popular enticement seems to be offering a fixed salary along with employee stock ownership plans (ESOPs). Edtech “companies are putting a lot of emphasis on ESOPs” to attract talent, says Gupta. “Companies that have raised various rounds of funding... their ESOPs become a lot more attractive.”

Companies have also been paying out salaries by adding a “sales component” to the variable portion of teachers’ remunerations. “Edtech companies tell their teachers to use sales coupons in their names. These coupons help students get discounts on courses and the number of such coupons sold by the teacher is counted as the sales generated by them,” informs an industry source.

“Our teachers receive numerous benefits, including competitive salaries, stock options, social security benefits, and life & medical insurance. Thanks to the advancements in edtech, teachers can now reach a wider audience, make a greater impact and become recognised and appreciated by students from all over,” says Khengre of Physics Wallah.

There is also a concept of ‘star teachers’ within edtechs, say sources. These are teachers who are followed by a huge number of students on social media and significant years of experience. According to the industry sources, the top 20 ‘star teachers’ of edtech companies were paid an annual remuneration of Rs 3-4 crore during the pandemic. The coupon component works mostly with the star teachers.

The Real Test

Just when the edtech industry was riding high on success, it hit a bump as schools and offline institutes resumed operations with Covid-19 infections ebbing. “During the pandemic, edtech companies doubled down on their efforts to increase their online presence but now a hybrid way of learning was the new normal. And since they became so focussed on serviceability, the players have become extremely competitive,” says the source.

With competition growing, edtechs have resorted to poaching star teachers in order to maintain the edge over their peers. Over the past few months, multiple reports have suggested that edtech players are offering unheard of packages to the star teachers to grab a pie of their student base. “I got calls from two to three rival companies in the past two years who were willing to give me a 500 per cent raise,” says a star teacher to BT. A 500 per cent hike is “truly unheard of” in the sector, says Gupta.

However, with a higher pay package comes more responsibility. Working in an edtech company has become extremely “hectic and tiring”. “Earlier our focus was only on making content for the students. Now we are involved in making content for online and also handling operations of offline centres,” says the teacher mentioned above. And engaged as they are in their employers’ rat race, many feel that they are drifting away from the simple pleasure and spirit of teaching.

Not just that, the funding winter has resulted in layoffs at companies like BYJU’S, Unacademy, Vedantu, among others. Unacademy has even slashed salaries. “Unacademy’s leadership, including the founders will take a permanent salary cut. The reduction will depend on the current salary of the leaders, their scope and their performance. The salary cuts can go up to 25 per cent,” Co-founder Gaurav Munjal said on the company’s internal messaging platform on March 31 this year.

A fair amount of scaling down is happening within the edtech sector. The salaries have come down from Rs 3-4 crore to Rs 1.5-2 crore—almost half, says the founder of the edtech unicorn company mentioned earlier. “People who were overpaid lost their jobs first. There has been a lot of restructuring,” the founder says.

The way the edtech ecosystem has played out in recent times makes one wonder if traditional institutions and the talent pool is interested in joining edtechs. Job stability and number of paid leaves are the reasons why traditional setups continue to beat edtechs, according to experts. With edtechs now encouraged to integrate new-age tech tools like AI and ChatGPT for teaching and materials, will the millionaire teachers be able to keep their mojo? Only time will tell.

@bhavyakaushal2