Allen Career Institute, one of India’s leading coaching centers, has slashed salaries for its 4,000-plus faculty and administrative staff by 20-40%. This drastic measure reflects a broader challenge within the coaching industry in Kota, Rajasthan, known for preparing students for competitive exams. The move comes amid a significant drop in student enrolments, impacting the financial stability of the institution.
Reasons Behind the Salary Cut
Drop in Student Enrolment
The most pressing issue is a 35-40% decline in student enrolment. This year, student admissions fell from 131,000 to 81,000. The significant drop in numbers has directly impacted the institute’s revenue, necessitating cost-cutting measures. The enrollment period, which typically stretches from December to June, has seen fewer students enrolling due to various factors.
Shift in Coaching Landscape
The coaching landscape in Kota has seen a shift over the past few years. Institutes opened new centers in other cities within Bihar and Rajasthan, making it more convenient for parents to send their children to nearby locations instead of Kota. Additionally, concerns about student suicides in Kota have made parents wary of sending their children to the city. These issues have collectively contributed to the drop in enrolment numbers.
Faculty and Administrative Concerns
Impact on Faculty
The announcement of salary cuts has not been well received by the faculty. Approximately 600 teachers sent a letter to the institute expressing their concerns. The letter highlighted the financial and mental impact of the salary cuts. Faculty members, who have been part of the organization for years, feel betrayed by the sudden decision.
Variable Pay Structure
To address the financial shortfall, Allen has introduced a variable pay structure for its employees. Compensation will now include variable pay, ranging from 20-50%, depending on individual, company, and center performance. This shift adds uncertainty to the faculty’s financial stability, further exacerbating their concerns.
Broader Implications for the Coaching Industry
Competitive Landscape
Just two years ago, after the first waves of the pandemic, Kota’s coaching institutes engaged in aggressive faculty and student poaching wars, offering reduced enrolment fees and higher salaries. The recent salary cuts starkly contrast with the 2x-3x salary offers rolled out in 2022. This shift indicates a significant change in the coaching industry’s dynamics, with more challenges likely to follow.
Market Adaptation
The coaching market may struggle to absorb the affected teachers. With declining enrolments and financial instability, other coaching centers may also adopt similar cost-cutting measures. This trend could lead to a challenging phase for teachers in Kota and other coaching hubs across India.
Conclusion
Allen Career Institute’s decision to slash salaries by 20-40% reflects the broader challenges facing the coaching industry in Kota. Declining student enrolments, shifting coaching landscapes, and financial instability have forced the institute to take drastic measures. The impact on faculty and the broader coaching market remains to be seen, with more challenges likely on the horizon.
