Byju’s, India’s top edtech player fires 2,500 employees on growth fears, will trim marketing spend
BYJU’s, the world’s most valued edtech startup, will be laying off about 2,500 employees across departments to cut costs amid mounting losses, company said in a statement.
“To avoid redundancies and duplication of roles, and by leveraging technology better, around five percent of BYJU’S 50,000-strong workforce is expected to be rationalised across product, content, media, and technology teams in a phased manner,” according to the statement.
The company also added that its India K-10 acquisitions including Toppr, Meritnation, TutorVista, Scholar, and HashLearn, will be consolidated into a single business unit, whereas Aakash and Great Learning will continue to function as separate organisations.
“As a mature organisation that takes its responsibility towards investors and stakeholders seriously, we aim to ensure sustainable growth alongside strong revenue growth. These measures will help us achieve profitability in the defined time frame of March 2023” said Mrinal Mohit, CEO, BYJU’S India business.
In June, Moneycontrol reported that the edtech major was laying off 2,500 full-time and contractual employees from Toppr, WhiteHat Jr, and its core team across sales and marketing, operations, content, and design teams.
The last six months have been hard for the company as factors such as the year-long delay in filing of FY21 annual report, a large number of layoffs, and fundraising issues spooked its stakeholders.
“It can’t be tougher than this. And if this can’t break us, I can tell you nothing else will,” Byju Raveendran, founder of the eponymous $23-billion company, told Moneycontrol earlier. He said he has had sleepless nights as questions have been raised about the operations of India’s most valuable startup.
BYJU’s has declared a revenue contraction of 14 percent to $327 million in FY21. It said that a significant part of the growth in its business was not captured in the revenue figure due to a change in accounting practices, and almost 40 percent of the revenue was deferred to subsequent years.
The company’s revenue fell 3 percent year on year to Rs 2,428 crore on a consolidated basis, down from Rs 2,511 crore the previous year, according to the FY21 results. BYJU’s reported a Rs 4,589 crore loss in FY21, nearly 20 times the adjusted loss of Rs 231.69 crore loss in FY20 (2019-20).
In a statement on Wednesday, the company said the layoffs are a step to cut costs and achieve overall profitability. However, BYJU’s also claimed to have plans to hire about 10,000 more teachers in the coming year, adding to its current strength of 20,000 teachers.
“At a group level, BYJU’S will continue to fuel its growth, the company is expanding its teams along with hiring senior leadership to further build operational strength,” the company said.
“Over the last three years, BYJU’S has acquired multiple companies whose integration with its core business is now complete,” it added.
The company will also make changes to its marketing budget for more efficient growth. As significant brand awareness has been created in India over the past few years, BYJU’s thinks that there is scope to optimise marketing budgets locally and prioritise spending to increase brand awareness in overseas markets.
The edtech company is also planning to rejig its much-criticised sales model. Now, multiple inside sales hubs will now be created across India from where BYJU’S sales associates will reach out to incoming leads through calls, email, and Zoom meetings. According to the company, inside sales will lead to higher customer satisfaction and lower costs.
“These moves are expected to result in sizable savings with no impact on growth. None of these measures will have any impact on our revenue run rate”, said Mohit.
Moneycontrol earlier reported that BYJU’s -owned Great Learning was under fire for ‘mis-selling’ an IIT-Bombay course. A number of alumni of the Singapore-based edtech firm, acquired last year by BYJU’s, alleged that it mis-sold a course offered by the IIT.
Meanwhile, the company has also failed to close a funding round of $800 million as a global technology rout has weighed on valuations. Investors including Sumeru Ventures and little-known firm Oxshott haven’t transferred about $250 million of the targeted amount because of ‘macroeconomic reasons’, according to the company.
Collateral damage?
BYJU’s declining revenue and mounting losses for fiscal year 2021 has not only made it the most expensive edtech firm in the world but has also put the spotlight on the valuations of its peers.
BYJU’s commands a revenue multiple of over 40, and its peers are at the receiving end of increasing scrutiny and re-evaluation from investors. Consumer-facing edtech unicorns such as the SoftBank-backed Unacademy, Tiger Global-backed Vedantu among others, had raised multi-million dollar funds in 2021 at sky-high valuations, cashing in on the pandemic-induced boost for online education.But with the pandemic receding and schools and colleges reopening, these edtech companies have seen demand for their services moderating, thus raising concerns about their growth potential, industry insiders told Moneycontrol.