E-learning has witnessed a complete resurgence after the dotcom bubble burst in 2001. The growing popularity of the Internet has bolstered the e-learning initiatives of several global corporations. Estimates indicate that the current e-learning global market size is over $20 billion, which has grown ten fold since 1999.

Jaguar reportedly wanted to train its dealers across the world prior to the launch of their new version of cars. Since the training had to be disseminated globally, the company asked an e-learning service provider to offer a solution. The e-learning company created a CD ROM-based training module in English/other European languages for dealers across the world. The dealers were trained simultaneously and this turned out to be an extremely cost effective and time saving exercise.

E-learning has witnessed a complete resurgence after the dotcom bubble burst in 2001. The growing popularity of the Internet has bolstered the e-learning initiatives of several global corporations. Estimates indicate that the current e-learning global market size is over $20 billion, which has grown ten fold since 1999.

The Indian Scenario

E-learning in India started off primarily with the companies developing software solutions for delivery of e-learning modules. This was driven largely by the Internet hype. However, when the dotcom bubble burst, most of them sought alternate revenues. With the growing global demand for content, Indian companies quickly changed tack to deliver 'content' to the international clients - effectively leveraging the offshore model.

There are well over 50 vendors in the e-learning space in India; some of the leading players include NIIT Smartserve, Tata Interactive, Lionbridge, Brainvisa, Hurix, Mentorware and Praxis. Almost 50% of industry revenues are estimated to be from the unorganized sector/small players. While Nasscom has pegged the growth rate of e-learning at around 25% annually, our interaction with industry reveals that most of the top players are growing at over 30-50% per year. High growth rates, and growing maturity of players has meant that the industry has attracted its share of VC funding:

Going Forward

We expect greater consolidation in the e-learning industry, and we believe that the well-positioned and focused vendors will be extremely attractive acquisition targets for BPO companies looking to add new capabilities. There have been some significant acquisitions in the past, which are raising the expectations of the current frontrunners.

• Maximize Learning; a Pune-based company was acquired by publishing major TechBooks in 2005
• Bangalore-based Mentorix was acquired by Lionbridge in 2003
  

On the other hand, the largest Indian player NIIT recently acquired US-based e-learning company Element K for US$40 million. Harbinger Knowledge Products has entered an alliance with the US-based GeoLearning Inc, provider of managed learning services

Small Players: The Survival Challenge

The E-learning space is vast and largely undefined as an industry. Almost any vertical that is training-intensive ranging from Airlines, IT, Banking, Healthcare, Publishing or Education has tremendous scope for incorporating e-learning for their employees, customers, dealers or their core business. And given the cost and competency benefits offered by India, the offshore potential is huge.

While the large/midsized vendors with adequate funding, visibility and focus will grow or exit profitably; it's the smaller vendors that need to strategize better. Currently driven by low entry barriers, several of these smaller vendors lack proper focus and could lose out despite a huge untapped global market. They need to choose a comfortable niche in the huge e-space of learning and build differentiated capabilities. Vendors with domain specialization, multiple communication skills, and technological depth will be able to position themselves for a better future.

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