UK #EdTech sector grew by 72% in 2020 – with further growth forecast this year amid Spring Term school closures
Lockdown measures and mandatory school closures in 2020 led to an explosive 71.5% growth of the UK’s education technology sector (edtech) – in spite an -11% contraction in GDP (as of November 2020).
- Top of the class: 72% UK growth vs 18% global growth
- Value of UK edtech exports expected to reach almost £300m in Q1 2021
- +56% increase in job roles advertised in edtech in past year
- 41% of all edtech investment into Europe goes to UK
- +91% increase in UK investment, vs +8% in Europe, and -12% in USA
- Exceptional growth in AR (+119%), digital classrooms (+65%), and SaaS (+57%)
Growth of the UK's edtech sector surpassed the +17.9% year-on-year growth of the industry globally by 4x the pace.
The growth puts the value of the UK edtech market at almost £3.5bn – with edtech exports pre-crisis bringing in £170m to the economy, now expected to have topped £292m.
Tom Chambers, Senior Manager – Technology at Robert Walters comments:
“In the UK, the edtech market is still very much in its infancy – whilst a surge in demand was forecast for 2020, the reality exceeded all expectations due to the impact of Covid-19 and the need to continue education remotely, whilst simultaneously breaking down the barriers that prevent marginalised groups from accessing it.
“The requirement for both online courses and virtual classes as permanent academic fixtures will dramatically increase the scale of the sector over the next 12 months.”
David Roberts, CEO of edtech KidsLoop comments:
“Unlike many other sectors, the pandemic acted as a ‘hyper accelerator’ for the edtech market. Overnight educational institutions were expected to take their classroom delivery entirely remote, with technology being the only enabler of this.
“In the UK, the biggest barrier to the uptake of edtech to date has primarily been around the cost & time associated with teacher retraining. However, during lockdown teachers had no choice but to become accustomed to edtech tools and by and large learnt on-the-job.
“On the whole, the UK is early on in its journey of embedding technology into its education system – but now that the doors have been opened, we move increasingly closer to hybrid classrooms with the help of optimised learning platforms.”
SMALL FISH TAKING OVER THE POND
There are currently 600 edtech’s based in the UK – representing just 5% of all tech companies in the country. Despite this, overall vacancies in edtech grew by a staggering +56% in 2020 - compared to a +40% increase in vacancies across all other tech sectors in the UK.
Whilst within the UK and Europe there are yet to be any edtech unicorns (companies valued at over $1bn) – with almost all unicorns based in the USA and China - the tide does seem to be turning.
In fact, the UK attracts almost half (41%) of all edtech investment coming into Europe. Edtech investment in the UK has grown by +91%, compared to Europe where investment has increased by just +8%, and in the USA there has been a -12% decrease in investment in recent years.
Tom Chambers adds: “The social impact, youth of the companies and general attractiveness of the industry all plays a part in helping edtech to become one of the fastest growing sectors in Europe.”
The Robert Walters report identifies augmented reality (AR) as one of the key driving forces of the UK edtech market – growing by +119% in the past year alone. Augmented reality enhances the real-world environment with text, sound effects, graphics, and multimedia, with the value of global edtech AR predicted to surpass $5.3bn by 2023.
Digital Classrooms – those that almost wholly reliant on electronic devices and software – grew by +65% last year, and Software as a Service (SaaS) by +57% - a software distribution model where the application is hosted by a vendor/service provider and made available to customers over the internet – such as Google, Amazon and Netflix.
David Roberts adds: “The super-growth area truly will be in young children, in particular products that are more specialised and address niche or more complex needs – with users being premium schools. The biggest barrier in this market is the lack of test data in order to create a solid product, and it is here where the value of data will really grow.”
Global EdTech Market to reach $404B by 2025
6th Aug 2020: EdTech is growing at 16.3% and will grow 2.5x from 2019 to 2025, reaching $404B in total global expenditure. Even at this level, EdTech and digital expenditure will only make up 5.5% of the $7.3T global education market in 2025.
Driven by Higher Education tuition deflation, combined with faster/cheaper credible alternatives and digitization driving a lower administrative cost base across all sectors, HolonIQ has revised our Global Education and Training market size, downgrading total spending by ~$500B in 2025 compared with HolonIQ’s Pre-COVID outlook. We now expect the global education and training market to reach $7.3T in total expenditure by 2025 (all products and services and including digital).
Key drivers supporting the downgrade in market size include the expected deflation of higher education tuition spending as governments and consumers demand improved access, affordability and stronger ROI for post-secondary learning. At the same time, faster and cheaper education and upskilling alternatives are gaining traction and trust in the market. Broadly speaking, digitization is also expected to drive greater administrative productivity and efficiencies in the education sector, from a predominately analogue foundation.
Within the context of a downgrade for total global expenditure, HolonIQ’s updated global market size for EdTech is a $63B upgrade to our pre-COVID estimates. We now expect total global EdTech expenditure to reach $404B by 2025 representing a 16.3% CAGR, or 2.5x growth, between 2019-2025.
A short term surge in EdTech spending brought on by COVID-19 is expected to re-calibrate to a longer-term integration of digital technologies and transition to much higher adoption of online education over the coming years. Part of this transition includes significant ‘infrastructure catch-up’ required for managing learning, data and administration as most schools and colleges are still at the very start of a long digital maturity journey.
In addition to EdTech’s primary role supporting the formal education sector, B2C EdTech models are on the rise as students, parents and workers increasingly seek learning support and up-skilling for supplemental and/or more direct academic and career outcomes.
Underpinning the transition to digital, for incumbents and new models alike, are broader consumer technology expectations with respect to mobility, personalization, social and gamified learning.