Education and Training Services
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Industry Overview
The US education and training services industry includes about 45,000 companies and 300,000 self-employed individuals with combined annual revenue of nearly $30 billion. Major companies include Kaplan; Career Education Corporation (CEC); ITT Educational Services; and Sylvan Learning (part of Educate). The industry is highly fragmented: depending on the segment, the 50 largest companies represent only 15 to 40 percent of total revenue.
Education and training services is a broad category that encompasses job-specific certification; professional training; and classes emphasizing self-fulfillment, leisure, and hobbies. Many of the industry’s programs, classes, and training services fall under the category of career and technical education (CTE), historically known as vocational education, or "vo-tech.” High schools, community colleges, universities, and educational support services aren't included in this industry.
Competitive Landscape
Demand for certification classes is driven by employment trends in the medical, high technology, and manufacturing industries. Demand for classes emphasizing self-fulfillment is driven by personal income. The profitability of individual companies depends on maintaining low operating costs and recruiting enough students. Large companies have advantages in marketing and offering a wide range of classes and services. Small companies can compete effectively through personalized service and customized instruction. The industry is highly labor-intensive: average annual revenue per worker is around $80,000.
Products, Operations & Technology
Major services include management development and training (16 percent of industry revenue); technical and trade schools (15 percent); and computer training (13 percent). Other services include fine arts schools, sports and recreation instruction, exam preparation and tutoring, and flight training.
Education and training services cater to a broad demographic, ranging from a teenager taking a driving class to a CEO on a leadership retreat. Around 15 million Americans are enrolled in an educational and training services program. According to the Association for Career and Technical Education (ACTE), nearly all US high school students take at least one career and technical class, and 25 percent take three or more courses in a single discipline. One-third of college students are involved in CTE programs, and 40 million adults have taken short-term occupational training.
Coursework can take place in an individual’s home, an educational institution, office, online, or in the field. The goal of the class can be as varied as the subject matter, ranging from certification requirements to become employed or advance in a specific field, to leisure and hobby classes purely for self-fulfillment. Certificate programs are offered both online and in university campus settings and typically take 12 months to complete.
Operations involve both instruction and administration. Instruction expenses include faculty salaries, course materials, bad debt expense, lease and occupancy costs, and educational equipment. Administration expenses include direct marketing, finance and accounting, admission expenses, and legal fees. Instruction costs are about 60 percent of total costs and administrative costs around 20 percent, though this can vary considerably based on the type of program.
In addition to teaching technical skills, most educational and training services are heavily invested in Internet-based distance learning. Synchronous courses are “virtual classrooms” in which students view streaming media and converse with the teacher and other students through instant messaging. Non-synchronous classes allow students to learn whenever convenient, with minimum weekly login requirements.
