After test prep success, edtech unicorn PhysicsWallah is betting big on skilling

Physics Wallah (PW), which began its journey as a YouTube channel created by its Founder and CEO Alakh Pandey in 2016, holds a unique position as the only profitable edtech unicorn in India. Having experienced significant growth since its incorporation in 2020, primarily driven by its test prep business, PW is now betting big on skilling.

Skilling isn't merely an additional focus for PW; instead, it represents a core area for the company's future expansion, spanning both online and offline channels, Vishwa Mohan, CIO of PW and Sudhanshu Kumar, CEO of PW Skills, tell YourStory.

“In the entire journey of a student, the ultimate conclusion is reached only when a student secures a job,” Mohan says, adding that skilling plays a crucial role in the process, addressing the significant disparity between college education and industry demands.

Every year, approximately 13 lakh engineers graduate in India, with just half landing a job right out of college. The remaining face challenges and end up accepting jobs in BPO/KPO or data entry due to financial constraints and family responsibilities. These roles don't align with their skills, Dr Avantika Tomar, India Education Partner at EY-Parthenon, says.

Skilling remains a significant concern for job seekers. As many as three out of four Indians fear technology will replace their jobs if they do not continue to develop their skill set, according to a recent Emeritus Global Workplace Skills Study 2023 from professional education firm Emeritus, which is part of the Eruditus Group.

The same study highlights that most Indians expressed concerns about feeling pressure to keep up in the fast-changing job market. This has presented opportunities for companies like upGrad, Eruditus, Simplilearn, Scaler, and now PW to offer products or services catering to a growing demand in skilling, reskilling, and upskilling.

Although, currently, the Alakh Pandey-led company is not capturing the market share from players like upGrad, Eruditus, and Simplilearn, PW, being India's youngest edtech unicorn, holds the potential to compete with these firms in future, an investor at an early-stage venture capital (VC) fund tells YourStory, on the condition of anonymity.

“Skilling is not just a pathway to success, but a very intrinsic part of growth. In a world where knowledge evolves faster than ever, upskilling isn't an option–it's a necessity. At PhysicsWallah we understand that bridging the gap between education and industry demands is pivotal,” Prateek Maheshwari, Co-founder of PhysicsWallah, shares with YourStory.

Interestingly, Indian tech companies are increasingly relying on upskilling existing employees to bridge their talent gaps, and nearly two out of three companies are paying for their employees' upskilling programmes to overcome their skill gap challenge, as per Scaler’s 2023 Hiring Survey.

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Distinction from competitors

For PW, which began with test prep, guiding students to top colleges like IITs in India, venturing into skilling was “very organic”. 

Due to limited seats, not all students can attend IITs, which leads many to choose other private colleges. Four years later, many of them face challenges in getting jobs, explains Mohan.

Mohan adds that PW has both reactive and proactive strategies to deal with this problem. 

While the firm introduced its upskilling vertical, PW Skills, last year to address skill-related concerns shared by students in a reactive manner, the company provided a glimpse into its proactive strategy last month through the launch of PW Institute of Innovation (PW IOI), which comes under the umbrella of PW Skills.

Rahul Maheshwari, Partner at Verlinvest-backed V3 Ventures, believes that the edtech firm’s potential audience for PW Skills could consist of high school (Class 12) graduates who might not secure admissions to IITs or similar institutions. 

Beginning with an inaugural batch of about 150 learners, PW IOI’s campus in Bengaluru will provide a four-year residential programme focused on computer science and AI. PW's offline skilling strategy echoes that of Tiger Global-backed edtech firm Scaler, which also entered the undergraduate education sector in March by launching Scaler School of Technology in Bengaluru, offering a four-year residential undergraduate computer science programme.

While the approaches are similar, PW could potentially experience a smoother student recruitment process for its programme. One of the main contributors to PW's strong growth in edtech is its minimal customer acquisition cost, a factor that has posed a bottleneck for other players.

PW maintains over 61 YouTube channels and has a subscriber base exceeding 31 million. PW’s content has 5.3 billion views with 480 million hours of watch time on YouTube since the inception of its first channel in 2016. This strategic approach enables PW to acquire paying users with minimal expense in its core business areas, spanning competitive exam preparation, professional courses, as well as skilling and government job tests.

For skilling, PW operates through two main channels: one focuses on college-related content initially centred around promoting PW Skills and PW in Hindi, while the other, PW Skills Tech, serves an English-speaking audience.

Additionally, another channel, iNeuron, also caters to English-speaking students.

Pricing

Mohan notes that many of PW's skilling courses are accessible on YouTube for free or at highly affordable rates. He emphasises that these courses follow a disruptive pricing model, costing about one-tenth of comparable offerings in the market.

The first pricing tier for online skilling courses, which provide a six to nine-month hybrid learning experience that combines recorded and live sessions, is Rs 3,500 (inclusive of discounts).

Priced at Rs 20,000, the second tier offers a one-year course with live sessions led by professionals, access to the PW Skills Lab, a guaranteed job interview upon 60% curriculum completion, and pre-placement training (PPT) for refining soft skills and professional profiles, Mohan shares.

"In our nation, a significant portion of individuals cannot manage fees of 2 to 3 lakh for a skilling programme. With many aspiring for swift employment post engineering college, rapid job opportunities are vital,” Tomar says. 

According to Tomar, skilling programmes at lower price points in areas such as cybersecurity, digital marketing, data science, or AI, even without job assurances, offer students a chance to secure job interviews.

“As PW's pricing proves beneficial, the difficulty lies in demonstrating results due to the large number of participants. The key challenge in skilling revolves around ensuring successful placements,” remarks the early-stage investor.

Recognising this fact, beyond the usual online placement efforts, PW plans to arrange offline job fairs every quarter to facilitate student placements. 

The company recently organised a job fair, resulting in 400 positions secured through offline assessments on August 5 and 6, the PW Skills chief mentions. PW's approach provides both online and offline job opportunities, allowing companies to switch between modes as required. 

“Moving forward, our quarterly plan includes hosting another job fair by late October or early November, offering over a thousand positions from hundred-plus companies,” Kumar adds.

As an integral step, all students in skilling undergo the PPT, a process designed to prepare and evaluate their interview readiness for job applications.

“This approach has led to remarkable outcomes, with our students excelling in interviews, even from smaller cities,” Kumar says, adding that PW runs PPT programmes every two months, allowing students to join and, upon completion, progress to the next job fair.

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Investment and growth plans

Last December, PW acquired iNeuron Intelligence Private Limited, a specialised upskilling platform focusing on artificial intelligence and data sciences, for $30.2 million. By incorporating iNeuron's expertise into its upskilling unit, PW Skills, the edtech unicorn has significantly expanded its portfolio of technology-driven upskilling solutions.

Currently, PW's skilling unit employs 190 people, and the company plans to recruit additional academic mentors for the IOI, according to Kumar.

In the past six months on PW Skills, the firm accumulated around 44,000 paid users and a significant user base of approximately 7.5 to 8 lakh free users, according to Kumar.

Mohan underscores the company's “frugal policy” to run its business operations and notes, “all things are in place to make sure that our margins are well balanced”.

PW’s strategy of taking thousands of students has proven effective. The skilling initiative has been profitable, Mohan says, without disclosing specific figures. He emphasises that the company's entry into the skilling business was not “late” and closely aligned with a solid commitment to the “profitability game”.

The edtech company is working on broadening its skilling course portfolio, with plans to introduce both tech and non-tech courses, including MBA, in the coming months, Kumar notes.

It also intends to enhance its offline footprint, with plans for expansion into various cities, Kumar says, adding that PW’s focus is on targeting major IT cities that offer abundant job opportunities and company presence. After Bengaluru, the top locations on its list include Hyderabad, Chennai, Pune, and possibly Noida.

While the company has expanded into offline skilling, Kumar anticipates that approximately 70% of the skilling revenue will come through online channels.

The online channel is poised to generate substantial revenue due to PW’s extensive online reach and the absence of geographical barriers for enrollment, making it particularly viable for tech-based upskilling courses.

Capitalising on the momentum gained through online engagement and its advantages, the company is gearing up to introduce an online iteration of PW IOI in the coming months, Mohan shares. 

This new offering will enable students to enrol in a four-year online course covering foundational topics such as computer science and web development, with the option to specialise in big data or machine learning. The anticipated pricing range for this programme will fall between Rs 20,000 and Rs 30,000, he notes.

“I'm very bullish that if somebody joins this programme, it will help them strengthen themselves in spite of their background, to get a good job in the IT sector,” Mohan adds.

In May, the company revealed its plans to allocate Rs 120 crore over the next two to three years, to offer competitively priced upskilling courses.

PW has expanded its business rapidly ever since it became a unicorn after raising $100 million in June last year from WestBridge Capital and GSV Ventures.

“It is rapid, but that's what VC funding does to you. There is an expected return that they have to live up to,” says the anonymous early-stage investor.

While certain industry experts draw parallels between India's youngest edtech unicorn and the trajectory of embattled edtech major BYJU'S in terms of swift acquisitions and expansions, does this imply that PW might encounter comparable challenges to those experienced by BYJU'S?

“PW is very actively acquiring other startups and integrating them. So far it has not really been bad. But if they take some bad bets, then it could come down. I really hope that they don't try to outgrow themselves because we have one case where somebody tried and it did not work so well,” adds the early-stage investor.

Anil Joshi, Managing Partner, Unicorn India Ventures says that PW has been adding new verticals within the education segment and the strategy is working for it in terms of revenue growth. 

“The company is well-capitalised post-funding and is now on a growth path. While they have a good grip on what they started with, it has limited growth potential and hence expansion into new verticals is the only way to grow further,” Joshi adds.

(Cover image and infographics by Nihar Apte.)