Byju’s looks to lay off about 2,500 employees: There is a famous saying that ‘it is more difficult to stay on top than getting there’. This aptly fits the Edtech giant BYJU’s. The education startup raced to the top and within a decade of its establishment, it became the first startup to get the decacorn status. A decacorn is a startup that has a valuation of more than $10 billion dollars. But it seems that the fizz around BYJU’s is fast phasing out. It is struggling to complete its incessant buy offs and is falling to earn any profit.
BYJU’s on a firing spree
During the Covid pandemic, the country witnessed a surge in the demand for online classes. Established market players like BYJU’s utilised this pandemic driven demand and they expanded as if the post-pandemic era would never come. Without giving a second thought, they went on a hiring and acquisition spree.
But it seems that those unplanned decisions are coming back to haunt the EdTech giant. The demand for online education is witnessing a slump. It has forced the EdTech giant to revisit its strategy and draw new plans before it is too late.
Also Read: BYJUs is inching towards a slow and torturous death
The BYJU’s team has recently announced that it is aiming to become a profitable enterprise by the March of 2023. Currently, its balance sheets are in the red territory.
For this, it is optimising its marketing and operational cost. This will include a mass layoff and the EdTech giant Byju’s may fire around 5 percent or 2,500 employees within the period of next six months.
Hiring after firing?
In a media interaction with PTI, BYJU’s co-founder Divya Gokulnath informed that the company will start focussing on building brand awareness overseas through new partnerships. At a time of such drastic measures, it is mulling about hiring another 10,000 teachers for India and overseas business.
At a time when demand is dropping world over, the company is in plans to add 50% more work force in the teaching staff. As per company data, it currently employees around 20,000 teachers. It seems that with a single stroke of a pen, it is expanding its workforce without proper plan and management.
Struggling to improve its finances and register profit, the start-up said that the layoffs are a step to cut costs and achieve overall profitability. Along with the firing spree, the EdTech giant has consolidated its subsidiaries. It has subsumed Toppr, Meritnation, TutorVista, Scholar, and HashLearn into a single business unit. It informed that Aakash and Great Learning will keep functioning as separate organisations.
Also Read: After TFI’s explosive story about BYJU’s, the company pays Blackstone for Aakash deal
With the consolidation, it has tried to reduce its operational cost. The employees shown the exit doors mostly hailed from its subsidiary units like Toppr, and WhiteHat Jr. Apart from its subsidiaries, it has rationalised its core team of sales and marketing, operations, content and design teams.
As per media reports, around 350 employees of Toppr were removed from their jobs. Another 300 employees have been forced to resign. Reportedly, the company is using strong arm tactics with these employees and have threatened to withhold their salaries in case they resist the decision of the company.
Moreover, BYJU’s has asked around 600 contractual employees to leave.
This is not the first mass layoff undertaken by BYJU’s. In June, it fired employees by hundreds. The company has postponed its plans to file for an initial public offering.
Payoffs post media criticism and scrutiny
Earlier, the start-up was falling short of its commitment and not meeting its end of the deal to its subsidiaries. We had written extensively about this in our various reports. It rattled the BYJU’s co-founder so much so that they started sharing morphed pictures of our articles claiming itself as successful as “BRAHMASTRA”.
The earlier analogy given by BYJU’s Co-founder Divya Gokulnath aptly fits on BYJU’s balance sheet. Just like the Ranbir-starrer Brahmastra, BYJU’s has not clocked profit. It is currently valued at $22 million. In May, it posted a net loss of $577.4 million for the fiscal year 2021 due to higher promotion and employee expenses.
Here Byjus's co-founder tried to play a trick. Sharing favorable article's headlines, she declared that #byjus's is the second blockbuster after #Brahamastra . But, sharing morphed screenshot of unfavorable article written by me, she tried to downplay her company's misdeeds. pic.twitter.com/CHmeMIkDa3
— Rahul Gupta (@rahul0948) September 20, 2022
Also Read: BYJU’s Co-Founder, TFI challenges you to prove us wrong
Apart from rejecting the obvious, it started to cover its track. In the recent months, it is clearing its debts and commitments. It cleared all its dues to Blackstone and paid $234 million. It owed the said amount to the global investment giant courtesy of its deal to acquire Aakash, TechCrunch for an investment of $ 1 billion.
In our earlier articles, we have highlighted how BYJU’s used technical loopholes to readjust the revenues in positive terms. In an audit, its official audit firm Deloitte Haskins & Sells found that BYJU’s accounted for interest payment to its partner loan financing companies under revenue rather than under finance costs. It claimed that the interest is in the nature of payments to customers.
Although the Edtech giant is fulfilling its obligations to Blackstone and its subsidiaries, it shouldn’t forget that it has a major obligation to the poor parents it entrapped in its concealed EMI schemes. Further, it has to come up clean on its revenue numbers as we have highlighted the misgivings and financial irregularities in its balance sheets.
The recent firing spree highlights that the company messed up by making hasty decisions to acquire new ventures without any plan to get the proper resources required to pull the deals through. It should realise that in a greed to capture the entire education market, it should not end up becoming second Kingfisher Airways or Elon Musk who have suffered troubling situations due to unplanned acquisitions and buyouts.
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