NOVEMBER 1, 2022
Byju’s CEO and co-founder Byju Raveendran on Monday addressed employees in an email, citing that changes in “macroeconomic” factors have pushed the company to lay off thousands of workers. This followed multiple news reports indicating that job cuts may have been higher than previously documented.
A source-based report by TheMorningContext last week said the actual count of layoffs at Byju’s could be around 12,000 employees or 25% of the workforce. However, the edtech startup denied the report, saying that not more than 5% of employees were impacted.
“I seek your forgiveness if this process is not as smooth as we had intended it to be…So, we are informing all the affected team members individually with the dignity, empathy and patience they deserve. I want to emphasise that the overall job cuts are not more than 5% of our total strength,” Raveendran told in an internal email to employees on Monday.
FE has reviewed a copy of the email sent by the CEO which further stated that Byju’s had scaled “quickly and massively across the world in the last four years”, reaching more than 150 million registered students globally, but was forced to cut back on jobs to survive unfavourable market conditions.
Two sources aware of the rationalisation process, however, told FE that Byju’s has been scaling down in various locations in tier-2 towns by shuttering down a few satellite offices in various states. Inc42 was the first to report these developments on Friday. It said around 60 office locations are being shut down to save costs.
“The company has informed employees that a few of the satellite offices in small tier cities and towns would be shut down and prompted them to move to regional head offices instead of continuing working. However, the offline tuition centres belonging to Byju’s future school remain unaffected and will continue to function in the tier-2 locations since only the online learning-related job roles are affected by the layoffs,” added one of the sources.
Since the layoffs affected thousands of employees, the company management feels that having multiple office locations in the same state is unfavourable due to high costs, said another of the sources. “Even as the company may be shuttering down smaller office locations, it is still opening larger regional offices in each state instead,” added the source.
Raveendran’s email to employees on Monday did not elaborate on the shuttering down of offices. It, however, pointed out that the company’s decision to scale down job roles was inevitable since tech companies worldwide are forced to focus on “sustainability and capital-efficient growth” due to adverse macroeconomic factors.
“We scaled up quickly and massively across the world in the last four years…2018 to 2021 were our hypergrowth years…We also expanded our family significantly both in our core business and by onboarding team members from our acquisitions,” Raveendran said in his email to employees.
The edtech startup had gone on an acquisition spree since 2018 and bought around 17 startups in India and the US to date. Byju’s had reportedly spent more than $1 billion on those acquisitions since 2018. Its biggest M&A deals include the $950-million purchase of Aakaash Learning, the $600-million acquisition of Great Learning, and Toppr’s $150-million purchase — all of which were reported in 2021.
These acquisitions were made during the height of a funding frenzy into various consumer internet segments, which saw the edtech startups alone raising a record $4.2 billion across 310 rounds in CY21. “Then 2022 happened. This is the year when many adverse macroeconomic factors changed the business landscape. These have compelled tech companies around the world to focus on sustainability and capital-efficient growth. Byju’s is no exception to this trend. Having expanded exponentially in the past four years, it is now time for us to grow sustainably,” Raveendran added in his email.
He further pointed out Byju’s is currently working towards achieving profitability at the group level in the ongoing financial year itself since he believes that the business has “substantial economies of scale and unit economics” which could be leveraged to achieve profits.
“However, our rapid organic and inorganic growth has created some inefficiencies, redundancies and duplication within our organisation, that we need to rationalise to realise this. At the same time, we need to continue to realign our resources towards innovation and future-growth oriented projects,” Raveendran said.
The email further stated that the edtech giant is working on providing the best possible exit package to employees which includes extended medical insurance coverage for employees affected and their family members, outplacement services led by large recruitment specialists, and a provision to allow employees to look for jobs while on the company’s payroll.
“I am truly sorry to those who will have to leave BYJU’S. You are not just a name to me. You are not a number. You are not just five per cent of my company. You are five per cent of me. I know that nothing can really compensate for your loss. And I completely understand if you are upset about this…Please also know that this is not a reflection on your performance,” Raveendran further told employees.
Even as it continues to lay off employees, Byju’s said that will hire across all levels in this financial with plans to add a total of 10,000 more teachers in the coming year. It already claims to have around 20,000 teachers on its platform.
To date, Byju’s has raised over $5 billion in form of both equity and debt capital including a $250 million fundraising from existing investors and Qatar Investment Authority on October 17th. However, the startup has been in the news for a 17-month delay in reporting its audited financials to the registrar of companies (RoC) which prompted much scrutiny from start-up industry experts and from various Indian government agencies as well.
Byju’s reported a loss of Rs 4,564 crore in the 2021 fiscal. The financial statement revealed that the net loss of the company swelled to Rs 4,564 crore as promotion and employee expenses rose. Revenues dipped 3.3% to Rs 2,428 crore as it deferred about 40% of its revenue to subsequent years due to its new revenue recognition model.