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Poaching and coaching in Kota: Race for $500 million education hub heats up

As the pandemic recedes, competition between education companies in Kota is a lot more fierce than among the students as edtech startups look to hire teachers for their offline enterprises.

June 23, 2022 / 12:51 PM IST

Hemant Kumar Bhadoriya (name changed) was travelling in a chauffeur-driven sports utility vehicle on a Saturday afternoon in Kota, seemingly headed to Jaipur, where people typically go on weekend getaways.

Unlike the others, though, Bhadoriya was not out on a leisure drive. Neither was he actually going to Jaipur. He was, in fact, just sitting in the car and talking about money. Crores of rupees.

Bhadoriya is not a lawyer or an investment banker. Neither does he deal in illegal activities. He is a maths teacher at Kota’s top coaching centre and was negotiating with a potential employer, one of the country’s biggest edtech companies. The edtech startup had offered him a 40 percent hike on his existing salary of Rs 1.65 crore.

“At first, I was shocked and a bit sceptical when I heard about the offer as every day we have been reading about how hundreds of employees were getting laid off by startups,” said Bhadoriya, 46. “But then it was for their offline classes and I have been teaching all my life at offline classes here at Kota. So I said let’s take a chance. To be honest, the hike I was offered was very attractive.”

Bhadoriya’s story rings a bell with many educators from Kota who have been offered hefty hikes over the past few months by new-age edtech companies that have opened offline coaching centres in the city.

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The aggressive poaching at Kota for offline classes is taking place as online edtech companies lay off hundreds of educators elsewhere in the country, indicating that demand for offline education is rising again, especially in education hubs like Kota.

Everyone loves Kota

Kota, a city with a population of over 1 million in eastern Rajasthan about 500 km south of New Delhi, is known for tuition centres notoriously called ‘coaching factories’ that churn out hundreds of successful aspirants for the Indian Institutes of Technology every year.

These education centres provide direct or indirect livelihood to over 200,000 people in the city.

Kota has about 3,500 hostels and 22,000 paying guest accommodation centres where students stay, according to people from the city who spoke to Moneycontrol.

The story of Kota was intriguing enough to entice Netflix in 2019, just before the pandemic, to do a show that captures the ‘24/7 pressure cooker situation’ of the city. One of the show’s producers described Kota as a city where the people talk only about studies.

“Kota’s economics and emotions are only about studies,” said Shreyash Pandey, associate producer of the show called Kota Factory.

It all started in the mid-1980s, when engineers of Kota started their own tuition centres. Subsequently, in the late 1980s and early 1990s, a few students cleared the IIT entrance examinations, which motivated many educators to expand their coaching classes.

The Bansals of Bansal Classes and the Maheshwaris of Allen Career Institute were among the first to broaden the scope of their coaching centres.

Moneycontrol reported how the four Maheshwari brothers built Allen Career Institute from a grand total of eight students studying at their home 34 years ago to an institution that has hundreds of IITians on its rolls. The company recently raised $600 million (about Rs 4,500 crore) from James Murdoch's Bodhi Tree Systems, and also made forays into online teaching.

According to a report by India Today, the turning point for Kota’s coaching classes was when the first student from the city cleared the IIT entrance exam in 1985.

Many educators who taught at these coaching institutes then started their own tuition centres. In the following years, the coaching centres went on to do crores of rupees of business and the city started creating opportunities for educators worth millions of dollars.

On an average, a student in Kota pays up to Rs 2.5 lakh a year. About 150,000 students are admitted to the Kota coaching centres annually. Going by these estiamates, the coaching centers of Kota have a market size of as much as $500 million or about Rs 3,800 crore.

Kota’s tuition centres were among the first in the country to set up special arrangements for IIT aspirants, tying up with local secondary schools for class 12 board exams. The students were told to concentrate more on the IIT entrance exam and not to worry about attending class 12 lectures. The model was then adopted by many coaching institutes in the country.

The pandemic

The pandemic changed everything for Kota. The city that once bustled with young IIT and medical college aspirants now had empty streets. Educators, coaching centre owners, and students, among others, were staring at absolute uncertainty after the government announced a nationwide lockdown in March 2020 to curb the spread of COVID-19.

“Right from small eateries to paying guest accommodation centres, it felt as though everyone was jobless suddenly. The coaching institutes, which were full of thousands of students, were looking like graveyards and we really didn’t know what to do next,” said an educator working with the management of a top institute in Kota.

“We had thousands, maybe lakhs, of livelihoods at stake and the shift to online education was looking real.”

All the coaching institutes scrambled to find solutions.

“But everyone knew that once the pandemic receded, the people would come back to offline education and Kota would again become hot as it has always been because of the weather and the competition,” the educator added.

The educator has a point. Kota seems to have become ‘hot’ again because of competition. But this time, the competition between education companies is more fierce than the rivalry among students as edtech startups aggressively look to poach educators like Bhadoriya.

“Coaching centres have become more like poaching centres,” said another educator based in Kota, requesting anonymity. “And not just teachers, even students are being poached by offering them more lectures and content for cheaper packages. This has just started. We will see the edtech companies and the traditional coaching classes doing various things to attract students and educators.”

The educator’s comments come after Unacademy and PhysicsWallah, two well-funded online education unicorns, opened physical tuition centres in Kota. While it is a shift in strategy for both companies that were built on the model of online teaching, they expect offline and hybrid models to help them grow faster.

“For Unacademy, growth in the medical and IIT entrance exam preparation segment wouldn’t have been possible without going offline,” said one person familiar with the startup’s plans, requesting anonymity. “The team discussed it internally and thought making offline forays would be right at this time and Kota was the place to be for this as it is such an important hub for test preparations.”

Market share fears

The entry of the new-age edtech companies has threatened the dominance of incumbent coaching centres of Kota, which are concerned about losing market share.

“What they (traditional coaching institutes) fear is that companies like Unacademy, which have millions of dollars in their bank, will disrupt Kota totally with cheaper packages, better educators and most importantly, with hundred times better tech infrastructure,” said a former professor of IIT who has taught in Kota.

Most coaching centres in Kota conduct no-frills classes, offering nothing more than star educators to lure students. According to the educators Moneycontrol spoke to, the content provided in these classes is very good and comprehensive but it’s not digital. The pandemic made digital learning a habit for most and students may not be comfortable with books again, educators said.

“I can just do a CTRL+F on digital content and go to the chapter that I am looking for,” said a student. “It just becomes easier to skim through it on a laptop or mobile instead of going through hundreds of pages. It also saves time.”

Many coaching centres in the city also do not have biometric attendance, smart boards, projectors and other digital infrastructure facilities that edtech companies provide. One educator said students aged 14-17 find these things attractive and thus they may choose to go to these classes.

“I genuinely believe that companies like PhysicsWallah and Unacademy will attract more students, at least in the near-term, simply because their classes will look a lot more ‘cooler’ and this was missing in Kota. Other coaching classes, which have money in the bank, might add these things, but it will take time because they have never done it,” the professor said.

According to the professor, it won’t be easy for existing coaching centres to retain their market share.

Allen vs Unacademy

The fear of losing market share and the aggressive poaching have led to a full-blown rivalry between new-age edtech companies and incumbent coaching classes. One such rivalry is Allen vs Unacademy.

Unacademy, which opened its first offline centre in Kota in mid-June, is looking to open another centre in the city and claims demand for its classes is strong.

However, Unacademy’s journey in Kota hasn’t been smooth, according to people aware of the matter, who said it faced multiple issues, including direct and indirect threats allegedly from some people at Allen Career Institute after the SoftBank-backed unicorn poached 30-40 educators from Allen.

Brajesh Maheshwari, one of the four founders of Allen, warned educators who left recently that they would be blacklisted.

In an internal video shared with educators on June 10, Maheshwari said “Aaj se sharafat ki duniya khatam, jaisi duniya waise hum,” which translates to: from today, the world of decency ends, we will behave the way the world behaves.

Brajesh Maheshwari's video warning educators.

A day later, a few hours before the launch of Unacademy’s offline tuition centre in Kota, the startup sought police protection for its employees and educators who were paranoid about Maheshwari’s alleged threats, according to people aware of the matter.

The educators especially were worried because of the reputation of the Maheshwaris. Rajesh Maheshwari, the oldest of the brothers, claimed in a YouTube video a few years ago to be the ‘don’ of the coaching industry.

“If you wear an Unacademy t-shirt in Kota, you will see people following you,” said one person involved with Unacademy’s management team at Kota. “Obviously, there are no cases where someone actually hurt any of our educators. But the constant following, especially to hotels, restaurants and in some cases, to their houses, has created fear among the educators.”

Virtual threats

Some threats were virtual. The names of educators poached from Allen by Unacademy were made public via YouTube videos and some were circulated privately through messaging applications in Kota. The videos mentioned how in the past, teachers who left Allen couldn’t survive in Kota without Allen as Kota enjoyed a monopoly in the IIT entrance exam category.

One video that went viral on YouTube had an anecdote about an educator who left Allen a few years ago to start his own centre in Kota and was supposedly killed by his landlord after failing to pay the rent.

Allen's faculty left Allen and join Unacademy

“These are all tactics to just remotely threaten educators as Allen is scared about losing its monopoly in Kota,” said another person working with Unacademy’s management in Kota. “But to be honest, we all are a bit concerned and we have taken steps to allay the fears of the educators and some of our employees.”

According to this person, Unacademy opened bank accounts for its educators in nearby cities, and not in Kota, after many of them asked the company to do so amid alleged threats from Allen.

Unacademy executives who visited Kota for the launch of the offline centre stayed at educators’ houses after they noticed they were being followed to their hotels. Allen then allegedly sent ‘bouncers’ near these educators’ houses.

“Random people were roaming around educators’ houses suddenly and then someone complained about it on WhatsApp initially and then the police came,” said one person.

Under pressure

Many educators who decided to join Unacademy were made to wait for four-five hours during their exit interviews at Allen. They were then asked to call Unacademy and reject its offer, which also put pressure on them, the people claimed.

Moreover, Allen’s ‘unofficial people’ were present at the hotel where Unacademy had scheduled educator recruitment interviews.

“The same people were sitting in the same cafeteria every day where Unacademy was conducting interviews,” said one person. “Were they doing anything? No. But it was just a way of putting pressure on the educators to show them that Allen is watching them.”

The person added that some negotiations with educators thus happened in cars on highways as educators were scared about people following them.

On an average, Allen’s educators across streams get Rs 1.15 crore a year. Unacademy offered a 35-40 percent hike to the educators, according to people aware of the matter.

Just before the official launch of Unacademy’s coaching centre, the company had scheduled an event for the educators to pose in Unacademy t-shirts. But the event, which was planned at a public ground, was cancelled because the educators were scared, according to one person.

Unacademy executives who travelled to Kota for due diligence were also bothered by the local police, people aware of the matter alleged. Their cars were stopped and everything from their bags to the car tyres were checked by the police who said they had been tipped off about people carrying huge amounts of cash and certain illegal material.

Allen declined to comment on the matter. Unacademy did not respond to an email query from Moneycontrol.

Beyond Kota

The focus on offline coaching centres isn’t limited to Kota. As the pandemic recedes, demand for online learning offered by startups has also eased, prompting their ventures into offline coaching.

“It’s not only in Kota – there are at least four to five such hubs in India. And this is not the case with just Allen. Institutes at other hubs that enjoy a monopoly also do things like this,” a student from Kota told Moneycontrol.

“Back in the day, these people used to threaten students by telling them that they won’t achieve a good rank, but the students started realising that wasn’t quite the case. That’s when they started going after the educators.”

The fight for a larger share in the offline education space comes as demand for online and remote educational services is falling, thanks to the pandemic situation normalising in most parts of the country. Moneycontrol had reported how India’s edtech companies were struggling after the pandemic.

To be sure, India’s online edtech companies had two consecutive years of hypergrowth since the start of the pandemic in March 2020. Investors bet heavily on online education, which was in huge demand since the start of the pandemic, after millions of students were locked indoors.

According to data from Tracxn Technologies, edtech companies in India received $9.5 billion in funding over the past two years, with six companies joining the coveted club of unicorns – startups valued at over $1 billion.

This year, however, funding to the sector has slowed and companies such as Unacademy and PhysicsWallah are entering the offline segment by opening centres in some of the country’s famous education hubs including Kota.
Nikhil Patwardhan
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