Indian edtech firms leverage AI to curb cash burn, growth hiring

Generative AI in Edtech

At a time when they are hamstrung with mounting losses and face pressure from investors to show profits, Indian edtech firms seem to have discovered the genie in a bottle that could end many of their woes: artificial intelligence (AI).

Generative AI has given hope for a new lease of life to edtech firms, which have been trying all tricks in the book to cut spending and become self-reliant in the funding-strapped ecosystem for the last one year.

Moneycontrol spoke to edtech founders on the use of AI for building efficiency and curbing burn at a time when cash conservation has become imperative for them to survive.

Subramanian Viswanathan, co-founder and CEO of the upskilling startup Disprz which raised $30 million in its series C funding last week, told Moneycontrol that it is now undergoing a major rebranding exercise.

“Our company's product is becoming more AI-powered. In the next 12 months, we'll transform into an enterprise that heavily relies on AI,” Viswanathan said.

He added that the company plans to pass on core functions to AI, boosting efficiency and meeting increased demands without significant growth in headcount.

“We can achieve 20-30 percent productivity improvements over the next 12 to 18 months. We don't need to hire headcount anymore for growth, the incremental growth hiring will be met by the productivity improvements,” Viswanathan added.

According to the founder, in a normal course, if the company needed to hire 100 people to meet 80 percent growth, now that demand can be met with 20 to 30 people.

Also Read: Generative AI courses in hot demand as more Indians flock to upskilling platforms

This also comes at a time when the tech ecosystem is going through a hiring freeze.

While employee addition at Indian unicorns fell to a fifth in the first half of 2023 with rising diligence in expenditure, four out of India’s top five Information Technology companies have also reported a fall in headcount in the first quarter of FY24.

Building efficiency

While some edtech firms are going big with a complete rebranding to position themselves as an AI company, others are incorporating aspects of AI to build efficiency.

“In content creation, curriculum development, and student assistance, AI has greatly enhanced efficiency. Over the past year, we've scaled 2.5 times without an increase in headcount,” Ashish Munjal, co-founder and CEO of Westbridge-backed higher education and upskilling company Sunstone.

Munjal added that the company’s headcount in these functions has remained the same without growth taking a hit.

Rohit Srivastava, an expert in AI hiring and senior partner at LONGHOUSE Consulting, an executive search and talent advisory firm, told Moneycontrol that automation plays a significant role in both cost optimisation and customer experience enhancement.

“When we consider roles with extensive workforce deployment and well-defined processes, automation and technology can certainly replace them,” he said.

Like Munjal, Sumeet Mehta, co-founder and CEO, LEAD, believes the school edtech unicorn has had the biggest impact on its costs with AI.

“We have seen that our ability to create more curriculum and solutions has gotten accelerated. We have built a tool internally, which is basically helping us develop new curriculums and new question banks at much faster speed and much lower costs,” Mehta told Moneycontrol.

The LEAD chief added that the company is working on at least seven applications to serve newer school segments.

Ashwin Damera, co-founder and CEO of upskilling unicorn Eruditus, told Moneycontrol earlier that the implementation of AI models in grading and feedback will save a lot of faculty time, bandwidth and costs.

LONGHOUSE’s Srivastava, however, believes companies are more bullish on enhancing the consumer experience.

What’s new with AI in edtech?

Moneycontrol had reported how Indian edtech firms were using ChatGPT for a host of applications including assessment, customer support and auditing purposes, among others.

Since then, edtech companies have been experimenting with new use cases to improve their offerings.

LEAD’s Mehta said that the company is developing an AI solution to support teachers for review and remedy.

“We've built a solution that gives the teacher an understanding of which topics should be reviewed for the whole class and then, individual solutions for students who have not understood specific questions by reviewing the data of answers in a test,” Mehta explained. The company has started implementing this solution in its schools.

AI as teaching co-pilot

Similarly, Manan Khurma, founder of Cuemath, in a recent interaction said that his company is working on creating co-pilots for both teachers and students.

“When a teacher is teaching, we think generative AI can enable the teacher to explain better to the child. If they have a doubt, generative AI can be used to process what the doubt is and create prompts for the teacher. We call it teacher co-pilot,” said Khurma.

“On the student side, there can be student co-pilots that generate smart hints for the students in terms of how they should think in terms of the next step,” he added. The company is also working on other solutions like voice AI which will analyse what a teacher or a student says in a class, Khurma said.

For Sunstone, whose operations require assisting students with placements, AI has been of help.

“We're implementing an application that aids students in creating polished CVs. Formerly, a team meticulously reviewed CVs, but now, 80 percent of that work is done by generative AI,” said Sunstone’s Munjal.

The company is also using AI and ML to enhance placement readiness by analysing academic performance, competency evaluations, and student engagement data to offer personalised guidance, he added.

Similarly, Disprz, which operates at the intersection of upskilling and SaaS, is now automating responses to request for proposals (RFPs) and other standardised tasks.

“Many tasks involving standardised processes can now be automated using AI. It won't entirely replace jobs but will expedite processes,” said Disprz’s Viswanathan.

As automation becomes a driving force for cost optimisation, the adoption of AI seems to be giving another chance to rewrite the narrative for these startups, enabling them to navigate tough times with innovation and adaptability. It is yet to be seen to what extent AI helps these companies and their counterparts in the space in their quest for profitability.