To Breed More Unicorns, Latin America Must Grow Edtech IndustryBy Pato Bichara | Thu, 05/05/2022 - 16:00
Latin America’s startup ecosystem is growing faster than ever before, and so is the need for quality education for the new generation of leaders guiding the region’s digital transformation. For the first time ever, the constraint for economic growth is not access to capital, but to talent.
If we want Latin America to keep up with competition on a global scale, we must train and retrain our talented people to sustain this digital revolution. As founder of Collective, an edtech focused on training intrapreneurial and entrepreneurial leaders on future skills, especially through our Master in Business & Technology and Enterprise Learning programs, I am convinced that this is the biggest challenge we face as a region.
The term edtech refers to education companies that have a strong tech component in their delivery. They serve every age (“Pre-K to Gray”) and every type of student, from early childhood and K-12 through higher education, adult consumer learning, and corporate training. The edtech industry is growing rapidly, and Latin America must continue investing in education to help close the skills gap between what employers need and what the talent pool can offer.
The reality is that in Latin America, less than 30 percent of the population over the age of 25 has completed post-secondary education, compared to 50 percent in the US and in European countries. And going abroad for business education, such as to an Ivy League university in the US, is expensive, with an MBA costing about US$200,000. But the tech ecosystem is growing rapidly, so demand for talent is rising. As of February 2022, Latin America had 42 unicorns. Big tech companies such as Facebook, Google, Amazon, Uber, Stripe, and Netflix, all are investing heavily to expand in the region. Finally, multinational traditional companies have destined millions for their digital transformations. The need for skilled leaders is strong, and instead, these companies are all facing a shortage of talent.
The shortage of talent with the necessary skills for the fourth revolution might be explained by the following. First, the rapid acceleration of automation and economic uncertainty caused by the pandemic has shifted the division of labor between humans and machines, causing 85 million jobs to be displaced and 97 million new ones to be created by 2025, according to a World Economic Forum report from October 2021. It’s a truth that signals an enormous opportunity for the learning and development and human resources disciplines. Second, according to a recent ManPower report, hiring optimism has returned to levels not seen since the start of the pandemic, but that optimism is being tempered by the highest levels of global talent shortages in 15 years, with 69 percent of employers reporting difficulty filling vacancies.
Employers are not finding the professionals they need because jobs often require skills that did not exist 10 years ago. We are witnessing a talent war; when HR departments struggle to find candidates for specific roles, they often resort to poaching each other’s talent and seeing an increase in costs, especially for certain positions. As a result, many corporations have realized that they prefer to retrain their own people. At Collective, we offer that possibility. Companies like Grupo Bimbo or Bitso have chosen us as their go-to program for developing executives, ensuring the growth and advancement of the talent they need for this ongoing transformation.
Yet, the skills gap keeps widening and the current university system is not able to adapt at the required speed. Unlike traditional universities, edtechs have the ability to transform quickly. By using technology, we can reach more people and serve wider regions at a lower cost. We can offer curricula that can be upgraded like software, with content and case studies constantly curated to meet the needs of the latest trends.
What has become obvious to me, and to many others, both in education and in human resources, is that now is the time for education technologies to shine. It is the missing piece needed to achieve the vision of a thriving tech and digitalization era for Latin America. We have the ideas, we have the entrepreneurs and there is a wave of investment. Scaling and democratizing higher education is a must. We are already showing people the importance of learning throughout their lives. And the pandemic made it clear that online education can be not only high quality but also affordable and flexible.
In Collective, we often quote an African proverb: “If you want to go fast, go alone. If you want to go far, go together.” Collective is only one option among several other edtechs in the region. And we love going collective, because together, we are a movement. Companies like Domestika, which is already a unicorn, Crehana, Platzi: We are all serving different niches and use different methodologies, but we all need each other because what we are doing is growing in reach and scope. Finally, many of us are also developing partnerships with traditional universities, helping everyone in the education industry scale our impact.
From Pre-K to Gray, we are educating more people together, allowing more lifelong learners to have access to high-quality content and learning experiences that will result in them being relevant for a longer time in the workforce and with a higher return on investment. This will enable the creation and growth of more startups and companies, generating more unicorns and, more importantly, economic development in the region.