Education and training could be a $10trn business by 2030. Innovations such as e-learning and digitisation will offer huge opportunities for investors to cash in on the boom, says Stephen Connolly.
Medical breakthroughs, new technology and the disruption of established industries have become part and parcel of daily business news. By comparison, education and training can seem much less exciting, despite being critical raw materials for innovation and advance. A dynamic, cutting-edge and productive global economy is a result of a highly skilled and educated workforce. And in the same way that businesses must become increasingly nimble and adaptable with products and services, so too must the process of training the workforce of the future.
Global workers, often facing significant financial vulnerability and inequality, can see that their knowledge and skills are a passport to career progression, higher incomes, and better living and working conditions. At the same time, businesses can’t allow their employees’ skills to fall behind those of competitors – making corporate investment in training an imperative. These are powerful drivers: an individual’s instinct to progress and a business manager’s need to compete and succeed.
Serving them has helped to make education and training a significant industry with an attractive outlook. Spending on education was estimated at some $5trn (£4.1trn) in 2015 and is projected to double to $10trn by 2030, outpacing global economic growth, according to researchers HolonIQ. Witnessing the positive trends back in 2012, John Fallon, who had just taken over as chief executive of Pearson – the global education and publishing business – said that he thought education “would turn out to be the great growth industry of the 21st century”.
What education means for investors
Understanding how these changes could benefit investors requires a better appreciation of what education means. Unlike, say, the oil, mining and banking industries, there’s no clear-cut sector of businesses involved in education. Furthermore, many people are used to thinking of education provision as largely a not-for-profit activity – in the UK, for example, there are state and private schools, but the latter hold charitable or similar statuses and don’t have shareholders. But of course, it’s for-profit businesses that are of interest to investors. They’re not new and their success differs depending on the education services they offer, but their presence and influence are growing as they emerge in new niches, or even disrupt established but outdated education practices.
Think of global, borderless education emerging from an accelerating use of the still under-utilised internet; training delivered via the ubiquitous mobile phone; virtual reality applications to enhance experiences and take training to new levels; and gamification – employing video-game technology to engage with users and make them come back for more. These sorts of initiatives and breakthroughs are leading to premium share prices and strong growth expectations in other sectors. Niche and imaginative for-profit approaches to education should be little different.
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