The edtech major Byju's woes seem to be a never ending story with regular salary delays marred by successive layoffs. Immediately after the delay in salaries there have been reports that the company has laid off around 500 employees, mainly in the sales and the marketing roles from across divisions. The company has been facing challenges in securing funds and capital in running daily operations and reports point out that many people have been laid off just over a phone call and without any prior notice. It really speaks volumes about the mismanagement in the firm. But will there be an end of these lay offs.
“It has been difficult for them in many ways. They are on a path of trimming down the workforce by shutting down the projects which aren’t revenue generating and focusing on productivity. The focus is to extend the runway and calm down the frayed nerves of the investors. It might not be clear if they’d layoff more. Given this background, typically the leadership team works in an agile manner and they act based on the way the circumstances evolve. They would watch out for the signals from the investment markets and the growth trend of revenue streams. Based on these, we would see their next set of actions,” Aditya Narayan Mishra, MD and CEO of CIEL HR, told THE WEEK.
Experts further point out that with each successive round of layoffs, Byju's ability to support its student community has steadily decreased. “Internally, there's an expectation that the teaching staff has become demoralized, leading to potential impacts on the quality of learning. This issue is further compounded by the new cycle, where parents and students ultimately decide on their ongoing relationship with the brand. The downward spiral that Byju's finds itself in is incredibly challenging to reverse,” pointed out Alok Shende of Mumbai-based Ascentius Consulting.
It may be further recalled that Byju's has been experiencing a wave of significant staff reductions, with estimates indicating that over 10,000 employees have been let go in the past two years, including a recent cut of 500 staff members. These layoffs come amidst the financial strain and legal disputes, which are cited as primary reasons for the workforce downsizing. Byju's has stated that these job cuts are part of a larger restructuring effort aimed at refining its operations and improving cash flow.
“The potential for further layoffs at Byju's depends on a few key factors. If the company's financial challenges persist, it may be compelled to continue reducing its workforce. The ongoing restructuring process may also lead to more layoffs, depending on its progress and results. Conversely, if Byju's restructuring initiatives achieve their goals, it's possible that the current trend of layoffs could come to a halt. The future of Byju's employees remains uncertain, hinging on the company's financial stability and the outcomes of its restructuring efforts,” remarked space and aerospace expert Girish Linganna who also follows the ed tech sector in the country.
The company has faced a sharp decline in its valuation over the last one year. The decline was attributed to a combination of factors such as investor pullouts, the resignation of its auditor Deloitte, and a legal battle over a $1.2 billion loan. In response to the challenges faced by the company, investors including Prosus, GA, Sofina, and Peak XV, backed by Tiger and Owl Ventures are seeking the removal of Byju Raveendran and his family from the board. Citing financial mismanagement and governance issues, they had filed a suit at the Bengaluru NCLT for Raveendran's ouster, along with a call for a forensic audit and the appointment of a new board.