Vying for customers and its first revenues in India, education provider iCollege (ASX: ICT) is on course to sign a binding joint-venture agreement to establish an offshore student recruitment business by way of a 50/50 incorporated entity to be known as iStudy Australia (India).
This follows a heads of agreement (HOA) signed in April last year, with the ASX-listed company reporting that it has now planted the foundations needed to establish a sustainable foothold into the Indian market.
Currently, iCollege consists of five businesses which deliver accredited and non-accredited vocational education and training solutions throughout Australia as well as internationally.
iCollege has kicked off its Indian business venture by announcing initial revenues of A$20,000, representing 10 students recruited in May and June 2019, which it said “evidences the company’s ability to execute on its plans for expansion into India and validates the adopted business model.”
One of the primary methods to acquire customers, the iStudy Australia (India) office is located in Mumbai which it said is now “fully operational with first revenues generated through its English language training, student visa applications, student placement and recruitment”, including the first placement of students at the iCollege Sero Perth campus.
Market research has identified a significant gap in the Indian market for vocational education given that only 2% of India’s workforce has received formal skills training while India has an estimated 7 million people a year enrolled in vocational training.
This is in stark contrast to 90 million in China and 11 million in the US.
Surveys of employers found that half of new hires and graduates are not adequately prepared for their job and poor assessment and certification systems make it difficult for employers to distinguish the quality of institutions and graduates.
In a report titled “An India Economic Strategy to 2035”, researchers said that “over the last two decades, the Indian Government has developed infrastructure and resources designed to expand capacity to cater for over 40 million students.”
The report went on to state that Indian Government estimates suggest an additional 120 million skilled workers will be required by 2022, fuelling demand for vocational training and “driving the need for cooperation between Indian national companies and international partners”.
Australian born market response
The establishment of iStudy Australia (India) was in response to its strategic plan to increase onshore demand through international delivery and pursuit of modes of vertical integration.
According to the terms of the HOA signed last year, iCollege will be responsible for providing training, support and consultants where necessary, whilst its Indian partner has agreed to reconcile all establishment costs including staffing, marketing, and day-to-day operations costs.
As part of its strategy to enter the Indian market, iCollege plans to enter into agreements with Indian partners to establish vocational training facilities in India, including the establishment of a Hospitality School of Excellence in Mumbai.
Also, to reconcile existing prohibitions to international students, iCollege plans to obtain approval from the Australian Department of Home Affairs to act as a sponsor under 403, 407 and 408 visa sub-classes to enable iCollege to sponsor international students and graduates to undertake workplace training programs in Australia.
To boost its customer base even further, iCollege wants to take advantage of its existing 1,800-place allocation to the Commonwealth Register of Institutions and Courses for Overseas Students (CRICOS) – a state-funded initiative operated by the Department of Education which iCollege has already filled to the tune of 700 places.
In order to improve its overall business and to provide supplementary exposure, iCollege plans to enter into agreements with the Commonwealth Bank of Australia (CBA) and Allianz Global to offer Australia-bound international students access to insurance, bank accounts and other on-boarding services.
As far as generating commercial momentum, iCollege said its newly launched office will “maintain a continuous focus on digital marketing, trade show expos and school visits”, with a view to increasing the awareness of iStudy Australia (India) in the lead up to University intake time in February 2020.
Training and education market
According to market analysts, the Australia-India connection is experiencing significant growth. India is currently Australia’s second largest education market and Australia is the second most popular destination for Indian students after the US.
“Australia’s competitive advantage resides in its capacity to provide a high-quality tertiary education taught in English, with attractive work and migration options for Indian students, alongside a world-class vocational system,” the company stated.
iCollege said that if Australia maintains its growth of international students and can recapture its share of Indian students from its 2009–10 peak, direct revenue from Australian education exports to India could exceed A$12 billion by 2035.