Rising high school graduate rates will spur demand for placement tests, boosting revenue
Los Angeles, CA (PRWEB) July 21, 2012
In 2012, the Testing and Educational Support industry is expected to grow 2.2% to $16.0 billion. Over the past decade, the controversial No Child Left Behind (NCLB) Act of 2001 has been a primary driver of growth. The primary beneficiary has been the educational-testing segment; under the legislation, schools take assessments to ensure they meet the requirements to receive federal aid. “While reform is currently taking place, industry operators are still reaping the benefits of schools' attempts to maintain standards,” says IBISWorld industry analyst Kevin Culbert. In the five years to 2012, IBISWorld estimates industry revenue has increased at an average of 4.1% annually.
Relatively strong growth has enticed new firms into the Testing and Educational Support industry. In the five years to 2012, the number of firms has increased 3.2% annually to 72,785. A large proportion of entrants are nonemployers, which represent some 90.0% of firms. “The rising number of operators has put downward pressure on industry profit,” adds Culbert. “However, declining profit margins have been mitigated by the increased use of online testing.” Online testing has caused wages to fall as a percentage of revenue, from 34.2% in 2008 to 33.7% in 2012.
Industry firms provide educational testing, educational consulting and student exchange programs. Testing service providers generate the lion's share of revenue and help develop, distribute and score accountability and performance tests. They are also responsible for college entrance exams, such as the Scholastic Aptitude Test (SAT). With an increasing number of high school graduates, competition for college placement is high, helping boost revenue generated from standardized tests. The industry's largest firms, including major players Pearson PLC and Educational Testing Service, operate in a number of locations, particularly those providing educational testing services to schools, universities and industry associations. However, many industry players are small, regional firms that often provide educational consulting services.
In the years to come, industry growth will depend on government legislation and funding, which leaves many operators waiting to see what the next step will be after NCLB. However, the increasing number of high school graduates is expected to contribute to continued growth. For more information, visit IBISWorld’s Testing and Educational Support in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry provide noninstructional support services for education industries. The major segments of this industry are educational testing services and educational consultants. This industry does not include computer software designers that develop education support software; those operations are included in the IT Consulting industry (IBISWorld industry report 54151).
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
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