Struggling with financial constraints, Byju’s is downsizing its workforce, affecting approximately 500 employees, which accounts for over 3% of its 15,000-strong workforce. This move is part of a restructuring effort amid a severe funding shortage and challenges with investors and lenders.
Additionally, the educational technology (edtech) company has witnessed a decrease in its valuation, adding to its financial woes. The recent layoffs have primarily affected positions in sales, marketing, and teaching within the organisation.
The recent wave of layoffs is a continuation of the restructuring initiative initiated by the Bengaluru-based edtech company last year, aiming to trim its workforce by approximately 4,500 employees. Spearheading this effort is Arjun Mohan, who assumed the role of Chief Executive Officer of the India business, succeeding Mrinal Mohit.
Between October and November last year, around 3,000 employees were released as part of this ongoing restructuring process. However, in the recent round of layoffs, the company’s Human Resources (HR) department executives terminated employees’ employment via phone calls, followed by email notifications.
They swiftly initiated the exit process, informing affected employees that their last working day was the same day they received the communication, as per individuals familiar with the situation. “Employees received a call from HR executives informing them that ‘today is your last working day,’ followed by an email,” stated one source.
Some employees have expressed dissatisfaction, stating that the HR executives’ conduct was inappropriate. Additionally, according to sources, aside from conducting layoffs via phone calls, Byju’s terminated employees without placing them on a performance improvement plan or providing a notice period. When employees sought clarification regarding the layoffs, HR executives attributed them to the company’s challenging financial circumstances.
“There is significant stress among employees as Byju’s has deferred staff salaries for the second consecutive month,” stated an individual familiar with the matter. “The company is experiencing attrition, and many employees are actively seeking new opportunities. However, the job market is competitive, and they are struggling to find positions offering salaries comparable to those at Byju’s.”
While the company confirmed the layoffs, it did not disclose specific numbers. “We are in the final stages of a business restructuring exercise announced in October 2023, aimed at streamlining operating structures, reducing costs, and improving cash flow management,” said a spokesperson for Byju’s.
“We are currently facing an unprecedented situation due to ongoing litigation with four foreign investors, causing significant stress for every employee and the wider ecosystem,” stated the spokesperson. “We deeply regret the unfortunate circumstances that have arisen, but we are confident that with the overwhelming support from the majority of investors for the $200 million rights issue, we will soon overcome this challenge. We appreciate everyone’s understanding of the individual and collective stress within the system, which may lead to unforeseen circumstances for departing employees.”
As part of its restructuring efforts, Byju’s has relinquished all its regional sales offices throughout India, retaining only its headquarters at IBC Knowledge Park in Bengaluru. The number of offices relinquished is substantial, likely exceeding 20 locations across cities such as Delhi, Gurugram, Mumbai, Pune, Hyderabad, and Chennai.
The process of restructuring office space commenced several months ago under the leadership of Chief Executive Officer Arjun Mohan. However, a recent decision was made to close all regional sales offices, a move aimed at reducing costs amidst significant financial challenges and a devaluation of the company’s worth, as reported by sources.
Consequently, all 15,000 employees have been instructed to work from home indefinitely, marking a significant shift in the company’s operational strategy. Nevertheless, staff members stationed at approximately 300 Byju’s tuition centres nationwide will continue to report to their respective offices.
At its zenith in 2022, Byju’s boasted approximately 50,000 employees, inclusive of personnel from the edtech firm’s various subsidiaries. Sources suggest that Byju’s financial condition may see improvement following the anticipated $200 million raised through the rights issue. However, the company is contending with another hurdle as it grapples with delays in disbursing salaries to its workforce.
This delay is attributed to funds raised through a recent rights issue being held in a ‘separate account’ due to an ongoing dispute with investors. Despite these challenges, company management, led by Byju Raveendran, has assured employees that alternate arrangements, including a parallel line of credit, are being pursued to ensure that March salaries are disbursed by April 8. Employees, who were originally slated to receive their salaries on Monday, have been provided reassurances amidst the current circumstances.
Byju’s finds itself embroiled in a legal battle with its investors at the National Company Law Tribunal (NCLT) over a $200 million rights issue, with allegations of oppression and mismanagement at the forefront. The four investors – Prosus, General Atlantic, Sofina, and Peak XV Partners (formerly Sequoia India & Southeast Asia) – have raised concerns regarding the rights issue being priced at less than 99% of Byju’s peak valuation of $22 billion.
In response, the NCLT, in its order on February 27, directed the edtech firm to place the funds raised from the rights issue into an escrow account. However, the withdrawal of these funds is contingent upon the resolution of the dispute surrounding the rights issue, as outlined by sources familiar with the matter.
This development arises within the context of an oppression and mismanagement petition lodged against Byju’s by the aforementioned investors. Byju’s remains optimistic about the Indian judicial system and anticipates a favourable resolution that would allow it to utilize the funds generated from the rights issue, thereby addressing its current financial challenges.
Despite facing setbacks, the company reported a substantial increase in revenue to Rs 5,014.60 crore in the fiscal year 2021-22 (FY22). However, losses widened to Rs 8,245.2 crore in FY22 from Rs 4,564.38 crore in the previous fiscal year, primarily due to underperformance by subsidiaries WhiteHat Jr and Osmo.
Nevertheless, Nitin Golani, India Chief Financial Officer, expressed confidence in the firm’s trajectory, predicting consistent improvement and a significant reduction in losses for the fiscal years 2022-23 and 2023-24. Golani highlighted that the company has implemented several measures to enhance its operational and financial performance, notably by substantially reducing the scale of underperforming business units.
