Tough lessons: Are Byju’s mass layoffs a sign of trouble for India's edtech sector?

Tough lessons: Are Byju’s mass layoffs a sign of trouble for India's edtech sector?

Founded by Raveendran, the Bengaluru-based educational technology start-up, is currently valued at $22 billion. AFP

Edtech company Byju’s tagline is ‘come fall in love with learning’. However, their recent actions of laying off more than 2,000 employees in a week is surely going to make them ‘unloved’ by many.

Believed to be India’s most valuable start-up, Raveendran-led Byju’s, has laid off 2,500 employees across its group companies, as reported by Moneycontrol.

2500 is a big number….#byjus From growth to cost cutting in just 6 months.
Next 6 months will be cost cutting to survival….

— Arvind Datta (@datta_arvind) June 29, 2022

Here’s a better look at what’s happening at the edtech company and the reasons for the massive layoffs.

Resignations and firings

On Wednesday, Moneycontrol reported that Byju’s had laid off full-time and contractual employees from Toppr, WhiteHat Jr, and its core team across sales and marketing, operations, content and design teams.

News agency PTI reported that Toppr had laid off 1,100 staff or about 36 per cent of its workforce from the company earlier this week.

As per the report, the employees from Toppr had received a call on Monday, asking them to put in their papers or they would be terminated without any notice period.

“I am part of the Chemistry subject matter expert. My entire team has been laid off. Toppr has promised one month salary for those who resign and no salary for those who don’t,” a Toppr employee told PTI.

The development comes after Byju’s group firm Whitehat Jr had laid off 300 employees.

“They have reduced content, solution-writing and design teams drastically across group companies. Some of these teams have even been reduced to zero. Earlier they were laying off employees from the companies they acquired so that their name doesn’t come directly, but now they have laid off employees from its core operations,” a source told Moneycontrol.

Another employee said, “They even promised in the beginning that our career will be very stable going forward. We even got our mail IDs of Byju’s and we also started working under Managers of Byju’s. Now I don’t know what happened but they just informed me on 27th saying that 29th will be our LWD (last working day).”

Toppr is one of the 12 companies Byju’s acquired between 2020 and 2021. The Toppr transaction was valued at about $150 million, which is also a mix of stock and cash.

Toppr was founded in 2013 as a rival to Byju’s, offfering after-school online learning courses with a focus on test-prep.

At the time of acquisition, the Zishaan Hayath-led start-up had 35 million monthly active users and two million daily active users on its platform.

Mumbai-based WhiteHat Jr, was acquired by Byju’s for $300 million in 2020. In 2020, WhiteHat Jr founder Karan Bajaj sold his 18-month-old start-up to Byju’s founder and CEO Byju Raveendran for $300 million in an all-cash deal.

Byju’s responds

With the news of the firings becoming headlines across platforms, the edtech company, currently valued at $22 billion, issued a statement saying, it was “optimising” its teams across group companies.

The company added that the “entire exercise involves less than 500 employees across Byju’s group companies”.

“We strongly deny the misinformation presented by Moneycontrol. To recalibrate our business priorities and accelerate our long-term growth, we are optimizing our teams across our group companies. This entire exercise involves less than 500 employees from across Byju’s group companies,” a company spokesperson said.

Tough lessons: Are Byju’s mass layoffs a sign of trouble for India's edtech sector?

In 2021, the Indian edtech industry witnessed a dream run in India. It was the third most-funded sector in India, raising over $4.7 billion. AFP

Woes at Byju’s

The layoffs comes amid reports that it delayed payments as part of its $1-billion acquisition of Aakash Educational Services in 2021.

The acquisition of Aakash Educational Services, a 34-year-old chain of physical coaching centres, was a whopping $1 billion and was touted as the largest in the Indian edtech space.

However, Byju’s had then responded by saying the acquisition process “was on track and expected to be completed by August”.

“Aakash is our most successful acquisition till date and we are very proud to have them in our fold,” the spokesperson said. “Along with all our group companies, we continue to be perfectly poised to provide access to quality education in all learning segments – from early learning to exam prep and career success.”

Besides this, Byju’s in March saw mass resignations after the company asked remote employees to return to respective office locations within a month’s time. The sales, coding and math teams were asked to work from Gurugram, Mumbai and Bengaluru offices, respectively. More than 800 full-time employees across the company, including from sales, coding, and math teams, voluntarily resigned from the start-up as they didn’t want to relocate to their respective office locations.

Tough lessons for edtech

The layoffs at Byju’s isn’t specific only to one company. Other edtech start-ups have also been facing similar issues, with an estimated 4,000 employees being fired in this year alone.

Unacademy and Vedantu have seen more than 600 employees leaving. Eruditus, Frontrow, Invact Metaversity and Yellow Class have also seen downsizing and Udayy and Lido Learning shut shop.

These developments come after the Indian edtech industry witnessed a dream run, churning out four unicorns in two short years as the COVID-19 pandemic forced schools and colleges to remain shut.

The enthusiasm over edtech was so high that in 2021, it was the third most-funded sector in India, raising over $4.7 billion.

However, with the pandemic now waning, these companies are seeing massive layoffs. Eldho Mathews, deputy advisor with the unit for international cooperation at the National Institute of Education Planning and Administration (NIEPA), a research-focused university in New Delhi, was quoted as telling, “Edtech industry will grow as a support mechanism. But it cannot be a replacement for classrooms.”

Another edtech entrepreneur explained that as students return to schools and colleges after almost two years of pandemic, parents have become hesitant in signing up for online classes. “There is this feeling of missing out, especially in the case of parents with younger kids. They are concerned that kid’s confidence and social skills will take a hit because they have not socialised for last two years.”

Additionally, HinduBusinessLine reports that the customer acquisition costs (CAC) in edtech is also rising sharply because of saturation in the traditional acquisition channels.

With inputs from agencies

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