Are aggregators out to eat agent’s lunch?

One could be fooled into thinking that the traditional agent model, of overseas bricks and mortar offices with enthusiastic counsellors on hand to provide prospective overseas students and their parents information, advice and guidance on studying abroad was doomed!

Governments in three of the major English speaking destinations Australia, Canada and the UK are talking increased agent regulation and while various voluntary codes of conduct have been introduced it is looking increasingly likely that the use of agents by education institutions will be regulated by government in the not-too-distant future. Politicians of all colours will use reducing immigration and the increasing numbers of so called “unscrupulous agents” to force through legislation, despite protestations from international education sector that has become increasingly reliant on agents to facilitate what is highly lucrative international student recruitment.

During the last decade the agent market has ballooned, with Australian federal government data showing that over 75% of international students are recruited through agents. When it comes to the UK there is no data to reveal an accurate picture of the numbers of students recruited through agents despite the voluntary schemes in place, but we estimate 60% of UK international students coming through agent referrals.

We at Asia Careers Group SDN BHD have long argued that total transparency is the way forward from both agents and the universities that work with them, as all transactions involve a cost per student usually in the form of a commission payment, this would not be difficult to achieve and would enable students to differentiate good from bad agents if degree completion rates were factored into the equation.  Plus, it would give senior managers within universities a more realistic picture of their cost of acquisition of international students, something badly needed in what are financially challenging times.

Whether governments legislate for regulation with all the cost that would involve or mandate total transparency from the sector, is not within our hands to dictate, that said whatever the outcome, the costs of doing business will likely increase for agents.  All this at the same time as governments are making it increasingly difficult to recruit international students in the first place, with increased visa applications fees, Australia recently increased their visa charges from AUD710 to AUD1600, making Australia the most expensive study destination for which to apply for a visa, with no guarantees of success.

In both Canada and the UK governments have raised the required proof of funds for international students, as a prerequisite for visa application and allocation.  Plus, with additional costs such as the NHS surcharge in the UK, studying overseas at one of the major English-speaking destinations has just got significantly more expensive, these changes will impact the agent model across the board with students and their funders increasingly looking to calculate the Return on Investment (ROI) of their overseas education before they take the plunge.

Simultaneously the agent aggregators once the darling of edtech are finding it increasingly difficult to make their bottom line add up for investors, with margins squeezed by international student caps in Canada and probably Australia, plus the lucrative vocational and private international education market becoming more challenging, with significant barriers to recruiting international students. 

Their solution is to turn to AI to create so called “virtual counsellors” that can advise prospective students and their parents from the comfort of their own homes. So, will this undermine the traditional agent model, particularly if one considers the costs involved in maintaining the bricks and mortar model, staff salaries at a time when the international student recruitment market is becoming increasingly challenging?

So, here’s the thing – it is not only the aggregators that can play this game, arguably traditional agencies with numerous human counsellors on hand for the AI to learn from, have the best chance of creating a best of breed “virtual counsellor,” if they record in person sessions and feed it into an AI framework.  In our opinion it would be madness not to be doing this as we speak.  The issue with technology as aggregators know all too well, is that there are few barriers to entry hence the proliferation of their kind during the pandemic, so there are few if any barriers to larger education agencies coming up with their own virtual counselling tools, but with the advantage of offering in person counselling to boot!

So, in answer to our original question are aggregators out to eat agent’s lunch, they may well be, but we doubt they will be successful.  That said the environment when it comes to international student recruitment is likely to get significantly more difficult in the foreseeable future and if it is not “virtual counsellors” what is the special sauce that will come to the rescue and save the day?

We feel strongly it is international employability, with increasing costs we have already mentioned that students and their families are increasingly looking to calculate the Return on investment in their overseas education, and to date there is little if any data on international graduate outcomes, particularly for students that return to their home countries.  This being the case the first agent network or aggregator to take this on board and provide their clients robust representative graduate outcomes and destinations data, be it through a virtual or in-person counsellor is likely to gain in market share when it comes to prospective students seeking out their services and be in a strong position add value to their university clients.