We expect further improvements in student enrollments in the coming quarters, as the job market is finally showing some signs of weakness. After mainly hearsay reports of large-scale layoffs, especially in the tech sector, including several high-profile public companies such as Meta, Netflix, and Twitter, and some private companies, Crunchbase estimates that a total of 85,000 US tech sector jobs disappeared in 2022.3
The latest data from ADP is also finally showing that hiring at US companies slowed in November, falling to its lowest level in nearly two years, while wage gains also moderated. In fact, manufacturing lost 100,000 jobs in November only, followed by 77,000 jobs lost in professional/business services, 34,000 in finance and 25,000 in IT.4 Accompanying the November edition of the ADP National Employment Report, Nela Richardson, chief economist at ADP, said in a statement: “In addition, companies are no longer in hyper-replacement mode. Fewer people are quitting and the post-pandemic recovery is stabilizing.”5
The longer-term education sector is growing and forecasted to reach USD 10 trn by 2030
Longer-term student enrollments are growing, structurally driven by population growth and multiplied by globalization and economic growth. Over the next 30 years, there will be an additional one billion graduates in the world, 75% of whom will come from Africa and Asia, according to HolonIQ.6 Global expenditure on education and training is expected to reach USD 10 trn by 2030, compared to about USD 7 trn today.7
Overall spend on education is growing at a compound annual growth rate (CAGR) of 3.6%. K-12, the largest segment, is growing at 4.2%, with a spend of USD 3.2 trn. Spend on workforce training is growing at 3.9%, with USD 400 bn. The USD 340 bn spent on pre-K represents a growth rate of 2.3%, while post-secondary has the slowest growth of 1.2% CAGR, with a spend of USD 2.2 trn.8 However, even within this slower-growing segment, there are interesting, faster growing opportunities, such as the USD 200 bn international education segment, which is growing at 7.4% CAGR.
We are still in the very early stages of multi-year double-digit growth in EdTech
On top of the structural growth in the global spend on education, penetration of technology in education (EdTech) is increasing from its very low levels (below 5% today), even after the COVID-19 catalyst. As a comparison, cellphone penetration was at a comparable level between 1997 and 1998, yet after that, the number of cellphone subscribers grew by double-digit figures for the next 15 years to reach the maturity level that we are enjoying today.9 Similarly, we are expecting many years of double-digit growth in EdTech from today, driven by digital transformation in the huge (and growing) education sector.