Ed-Tech Crumbling? Byju’s Reportedly Fires 2500 Employees! (Updated With Byju’s Statement)
Edtech major Byju’s, currently valued at $22 billion, has allegedly fired over 2,500 employees across its group companies.
It is looking to cut costs amidst a slump in demand for edtech services after two consecutive years of hypergrowth.
Story so far
A source has revealed that it has cut down content, solution-writing and design teams drastically across group companies.
Some of these teams have even been reduced to zero.
In an attempt to keep its name off the news, it was laying off people from companies they acquired.
Now, the company has sacked people from its core operations.
Acquired staff affected
1,500 employees from Toppr and WhiteHat Jr were sacked on June 27 and June 28.
Those two are the two companies it acquired over the last two years.
1,100 employees were laid off from Toppr alone, or about 36 per cent of its workforce.
300-350 permanent employees from Toppr were let go, while another 300 were asked to resign.
Top administration cited cost-cutting and redundancy in roles as the reason behind the layoffs.
The role redundancies come about as Byju’s looks to integrate Toppr’s operations with itself, as a result of which only the educators will have any major role to play.
Only about 100 employees are left at Toppr right now.
A Byju’s spokesperson said that the company has completed the integration of Toppr and has absorbed almost 80 percent of its workforce.
As the next step it will optimize teams to “recalibrate business priorities and accelerate our long-term growth”.
This “exercise ” involves “less than 500 employees from across Byju’s Group companies”.
The spokesperson denied any further layoffs and any layoffs at Byju’s core operations teams.
They refuted all these claims and called it “misinformation”.
Another source said that prior to the integration, the to-be-affected employees were assured job security.
They were allegedly promised initially that their careers would be stable going forward.
They had even received new company email ids registered with Byju’s and had already started working under the company’s managers.
What actually happened, the source said, was that the affected employees were informed on June 27th saying that 29th will be their last working day.
Some employees from Toppr and WhiteHat Jr received a call from their managers and HRs on the evening of June 27.
Given one day to leave
However, the official communication came in late on June 28, asking them to resign the very next day.
If they refused to turn in their resignation, they were threatened with refusal of payout of salaries for about 1-1.5 monthsL
If they agreed to resign, they were promised a severance payment, an additional 15 days’ salary for each completed year at the company, and a performance-based bonus, along with the entire salary for June.
Edtech sector in trouble
The developments at Byju’s continues the trend amongst edtech startups of massive layoffs in an aggressive bid to cut costs.
They are faced with a funding slowdown and a threat to business continuity with schools, colleges and tuition centers reopening.
Byju’s, which is India’s most valuable startup, had raised a whopping $800 million earlier this year at a valuation of $22 billion.
It was also in talks to raise overseas acquisition financing of as much as $1 billion.
Overseas acquisition spree
In a rejig to its leadership, it was speculated that it would elevate Mrinal Mohit, its chief operating officer, to a larger role, as Raveendran, Byju’s co-founder and chief executive officer was focusing more on the company’s global operations.
Raveendran had said in an interview with the Economic Times that the company is focusing on making multi-billion-dollar acquisitions in the US and elsewhere and is hence accessing all kinds of capital.
However, earlier this week it was reported that the startup has not yet paid millions of dollars to the shareholders of Aakash Educational Services which it had acquired fully in 2021 for $1 billion.
Byju’s denied any cash shortage and said that it wants to delay the payments until August, claiming that regulators have yet to clear the acquisition.
Financial results neither filed nor audited
In another sign of trouble, it is yet to file results for the financial year ended in March 2021 (FY21).
It also hasn’t had its results audited yet with Deloitte, denying to sign off on a few documents.
Byju’s had gone on record to say that it would file its results before the end of this month.
As of June 29, it is yet to do so.