Byju’s begins another round of layoffs; to impact 500-1,000 employees

The fresh round of layoffs, which started last week, is expected to impact employees across marketing, sales, business development as well as product and technology functions.

The latest restructuring exercise also includes teams at its coding subsidiary, Whitehat Jr., the sources added. Byju’s had acquired Whitehat Jr. for $300 million in 2020.

The layoffs add to the back-to-back cost-cutting exercises that Byju’s has initiated since last year to streamline operations, as digital K-12 (kindergarten to grade 12) education businesses are finding it difficult to acquire new customers.

“There have been back-to-back discussions with leadership to prune costs, throughout this year, and the internal mandate has been to let go of at least 3,500 employees this year, if not more,” said one of the above quoted sources, who spoke to ET on condition of anonymity.

Another source added that with growth stalling for the edtech major, the company has been telling investors that it is ‘bidding for profitability’ as it looks to increase runway.

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A Byju’s spokesperson declined to comment on the matter.

Also read | Byju’s lenders scrap talks to restructure $1.2 billion loan

Byju’s is backed by the likes of global and domestic heavyweights such as Pine XV (formerly Sequoia Capital India); Sofina, Tiger Global, Bond, General Atlantic and Prosus to name a few.

Earlier this month, the company – which continues to be at loggerheads with lenders for finalising new terms for its $1.2 billion term loan B – had parted ways with at least 1,000 individuals, which largely included contractual workers and on-ground staff sourced from third-party staffers.

The impacted contractual staff included on-ground sales teams, from third-party staffers such as Randstad and Channelplay, ET reported on June 8, citing sources.

In October last year, the company said it would look at ‘rationalising costs’ and part ways with 2,500 employees.

ET had reported on February 2 that the company had let go of another 1,000 employees, impacting many senior vice presidents drawing salaries of Rs 1 crore and above.

The latest job cuts come at a time when the company has been in talks with several global investors for months to shore up $1 billion in capital, across debt and equity.

As a part of the ongoing financing, Byju’s closed a Rs 2,000-crore round from alternative investment fund, David Kempner Capital, against the cash flows of its test prep subsidiary Aakash Educational Services, ET reported citing sources.

Troubles brew

Even as it continues to cut jobs, Byju’s has been negotiating with lenders on the repayment of its TLB, even as both sides have filed suits against each other.

While lenders like Redwood are pursuing a legal action suit against the edtech company in Delaware, Byju’s has filed a countersuit against the same lender and its entities in New York, against their demand for ‘accelerated repayment’.

However, both parties continue to negotiate on the matter, even as they pursue legal action.

Timeline: Byju’s $1.2 billion loan case

The TLB was raised before Byju’s slipped into turmoil globally and in India with demand for its Edtech offerings slowing amid easing of pandemic-induced lockdowns and reopening of educational institutions.

Last month, BlackRock, a minority shareholder with less than a 1% stake, wrote down the edtech’s valuation to $8.29 billion, as disclosed in a filing dated March 31, 2023, and reviewed by ET.

Also read | Byju’s lenders open to negotiations, seek draft loan amendment proposal

It was the second time that BlackRock had marked down the edtech major’s valuation in recent months. It had previously trimmed the valuation to a little over $11 billion in December 2022.

Further, the company still hasn’t furnished its FY22 results, even after an 18-month delay to furnish its FY21 results.

Late April, the Directorate of Enforcement (ED) had said that it conducted searches on several premises linked to Byju’s as part of its probe into alleged violation of foreign exchange rules over investments received and transfer of funds abroad by the edtech startup.

Sectoral cracks

Waning of pandemic growth, financial losses and mass layoffs have gripped India’s edtech ecosystem, as a post-covid correction has set in and several players make a beeline towards a hybrid approach of online and offline learning.

Byju’s arch-rivals including Vedantu and Unacademy, which have also been valued at $1 billion or above, have undertaken layoffs across several tranches last year, underscoring the sentiment of slowdown.

To add to the troubles, global macro headwinds and recessionary pressures are making it difficult for these startups to raise capital, even as they face challenges to grow into existing valuations, ascribed to them during the funding peaks of 2021.

Startups like Frontrow have laid off most of its staff even as they find it difficult to find buyers in the market. In September last year, cash-strapped edtech Lido Learning also filed for bankruptcy.