Professor Calculus triggers an LBO?

Need Help With Calculus? Tutors Coach U.S. Students Online — From India is an article from the Wall Street Journal.

Tanu Basu lives in Boston, but when she wants extra coaching in math, the 16-year-old American gets online and spends an hour reviewing calculus with an Indian teacher who is based in a suburb of New Delhi.

Nearly 40% of U.S. high schools reported difficulty filling math openings this year with qualified instructors, according to the American Association of Employment in Education.

Career Launcher (Founder: Satya Narayan) charges between $20 and $30 an hour, with rates rising for more complex material, on par with U.S. companies like tutor.com and e-Sylvan.com. Of these, e-Sylvan is the online tutoring arm of the highly successful Sylvan Learning franchise that has not been quite so successful in its online incarnation, that I view as a strong LBO opportunity.

Most of Mr. Satya’s 300 tutors don’t have education degrees, but they all have a bachelor’s degree, mainly in math or physics from Indian universities. Many also have graduate degrees. He pays $8 to $10 an hour — a fortune in India. Career Launcher recently began offering online tutoring to U.S. college students for $35 an hour — which is more costly than many U.S. online services. “You find very few companies offering college-level tutoring because of the lack of teachers,” says Mr. Phadke. “But here in India, we have so many Ph.D.s and people doing doctorates, so we think we can actually charge a premium.”

Leveraging the Indian labor arbitrage model is not the only opportunity for eSylvan, of course. Breaking away from the shackles of Sylvan would give them the ability to focus on more profitable and lucrative segments like Private Schools where the students are motivated, the teachers are not unionized, and the Sylvan franchise-owners are not ruffled by eSylvan stealing away their students.

Sylvan, of course, has benefitted enormously, from the No Child Left Behind (NCLB) Act, to the extent where the Act has been called “Sylvan Act”. Underperforming public schools often spend good chunks of their Supplemental Education Services (SES) budget on Sylvan. The public school teachers are a highly unionized bunch, who would demand the death of eSylvan if they found out that their jobs are being outsourced. It is no surprise that the two US clients of Career Launcher that are currently outsourcing have requested anonimity!

I would venture to guess, one of them IS indeed eSylvan, and when NEA (National Educators Association, one of the two main Teacher’s Unions in the US) finds out, they will throw a fit!

And if it isn’t it ought to be, or else the business is not viable!