There are plenty of reasons for it but for this post I would just concentrate on one aspect of it which is discussed over beer (or chai) among people working in the sector but not in the public domain.
The coaching companies at the national level charge anywhere from Rs 25000 to 45000. Depending upon the length of the program and the city they are situated in. An online course would probably be at one-third of the cost. The CAT coaching market is obviously shrinking and reducing the ticket size might not be a prudent idea. Also, a lot of them are franchise run models. More than the companies itself, franchises would be the biggest losers. Most of the revenue that a franchise makes comes from classroom students. Also, the share that a franchise can command in case of a classroom student is bound to be higher than in the case where he is just acting as a point of sale. Also, a lot of these students would buy the online course online and cut out the middleman. Franchises, and the business that they generate, are vital for the coaching institute and they cannot afford to annoy their partners.
On the other hand are individual teachers and coaching institutes which run only in one or two cities and couple of centers. Even they could come up with a great online product but a lot of them choose not to and here’s is why. Black Money! A lot of these teachers and coaching institutes get the money from the students in cash. More often than not they compel the students to pay in cash otherwise the student would have to pay Service Tax on the amount. On Rs 25000, the service tax would be approximately 3000 Rs. Most students would not like to pay that extra Rs 3000 just to keep the transaction in white. So now, this Rs 25000 goes directly to the teacher and he pays no tax on it. If this transaction was done on the web then it would have to be in white and the teacher / coaching institute might have had to pay a 30% tax on it. Also, doing a transaction online would bring in other costs as well like payment gateways. That is significant chunk of money which is saved.
Let me add that a lot of this is conjecture and I have no hard facts to back this assumption up. Let me also add that if I was in their shoes, I would be doing exactly the same thing.
I teach couple of online courses here: