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(English) Russia’s edtech companies step up in the pandemic

25 апреля 2020

(English)

The looming economic fallout in Russia could wipe out as much as 10% of gross domestic product, and yet it could also deliver some transformative shifts. Educational technology is one of the areas destined to grow worldwide. Russia is not an exception to this trend and expansion of online learning might also help modify the country’s archaic education system.

Stay-at-home policies imposed by the Covid-19 pandemic might be a blessing in disguise for edtech. This market that was already projected to hit US$40.9 billion globally by 2022 at an annual growth rate of 18.3% might receive an additional impetus.

The Covid-19 outbreak has facilitated an unprecedented rise of services such as Duolingo, a language-teaching app, which experienced 100% user growth in February in China, with school closures cited as a factor. Another example is Yuanfudao, one of China’s largest online education companies, which raised $1 billion in March.

Rapid online shifts have also spurred share prices higher and pushed many edtech startups to expand. It is safe to say that in the post-pandemic world, online education will play a greater role and will be able to challenge traditional systems of education, which a 2016 McKinsey report, “Educational Services,” described as the least vulnerable sector to technology disruption.

Russia has not been an exception to the rule. In 2019, the volume of the Russian online education market in the B2C segment reached 38.5 billion rubles ($500 million). In March, it was projected that the market’s value would surpass the 60 billion ruble mark, growing at an annual rate of 12-15%. The impact of the pandemic, which might disrupt the Russian economy for years, will likely change the calculus.

There are few companies in the Russian tech market, but competition is significant. Yandex, one of the world’s largest search engines, which also operates food tech, navigation and on-demand-taxi services, has leveraged its capabilities to launch Yandex.School. The project pledges to help teachers, students and parents retain a sense of normalcy during the pandemic and remains free to use.

The flexibility of the platform allows teachers to suit the progress of their students and apply it as a single resource or incorporate it into other remote learning programs. It has already seen more than 40,000 students logging into a lesson simultaneously, while lessons on the platform were viewed more than 2 million times in the two weeks following the launch on March 31.

Another flagship of Russian edtech is Skyeng, an online education platform that is funded by Baring Vostok, a major private equity fund. The company has been around for seven years and started as a platform to address growing language-learning demand, but gradually expanded and embraced other education services. In recent years it has emerged as the favorite tool for easy and fast access to language classes. Skyeng canceled subscription for 20 online resources after the Covid-19 outbreak and the measure will likely boost the company’s market share even further.

The spread of edtech might deliver serious disruptions to Russia’s education system. The country’s institutions have been on the rise compared with other developing nations. Russia has witnessed an improvement in the Times Higher Education World University Rankings and the number of its universities on the list rose from 27 to 35, making its schools the fourth most represented among the emerging economies. But the gains are overshadowed by a continuous decline in public spending over the past few years – a trend that is set to continue.

The Economic Intelligence Unit has predicted that Russia’s public expenditure on education will decline to 3.7% of GDP by 2030. The EIU also projects that public funding for tertiary education and job training may take a hit, as wage growth isn’t expected to rise as quickly as the cost of college tuition.

Russia’s national curriculums have also been occasionally criticized for using orthodox materials and tolerating widespread cheating and plagiarism. With the Covid-19 pandemic and declining oil revenues likely resulting in sluggish recovery, Russia’s education will most likely face some hard times that might push it to introduce structural changes.

The bleak prognosis could be partially offset by online learning that over time could become even more popular and find recognition on the state level. The current pandemic might have revealed online education as a viable alternative.

In effect, Russian officials who have been skeptical about the format could be more open about incorporating it into teaching methodologies. The growing popularity of open online courses could likewise deliver greater learning gains than the traditional model. Thus edtech in Russia has all the chances of spearheading changes among legacy institutions and pushing them to adopt online teaching services.

This would likewise significantly boost levels of technical skills among students and might enhance competitiveness in the age of digital disruption. In addition, Russia’s edtech companies would secure gains and the market’s projected volume would likely surpass current forecasts. 

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