BYJU'S, a prominent player in the Indian education technology sector, is set to implement a new wave of workforce reductions in the coming weeks as it undertakes a restructuring effort, according to information obtained by Iccbiznews from insider sources. This decision is a response to the edtech company's ongoing financial challenges, which include navigating a funding shortage, managing lender relations, and contending with a reduction in its valuation.
Layoffs at BYJU'S
Reports indicate that approximately 4,000 employees, representing more than 11% of its 35,000-member workforce, are expected to be affected by the layoffs. While a company representative verified this information, they chose not to disclose the specific number of employees who will be impacted. The spokesperson mentioned that the educational technology company is nearing the conclusion of its business restructuring process.
As we near the final stages of a business restructuring initiative aimed at simplifying our operational structures, reducing costs, and enhancing cash flow management, our spokesperson at BYJU'S stated, 'Arjun Mohan, the newly appointed CEO for BYJU'S India, will oversee the completion of this process in the coming weeks, guiding us towards a revitalized and sustainable operation.'
Arjun Mohan assumed the role of CEO for BYJU'S India operations a few weeks ago, taking over from Mrinal Mohit. Mohan had previously served as the company's Chief Business Officer (CBO) before briefly leaving to join UpGrad, an edtech firm led by Ronnie Screwvala.
Regarding Mohan's return, BYJU'S founder Raveendran previously remarked, 'His expertise is sure to contribute significantly to our turnaround efforts and bolster our standing in the global EdTech landscape.
Top level exits at the edtech
The prominent edtech company has experienced a series of departures at the senior level. Mohit, the departing CEO of BYJU'S India business, left the company to pursue personal ambitions, as officially announced upon his departure.
Previously, four other senior executives had also resigned: Prathyusha Agarwal, who served as the Chief Business Officer of the edtech; Himanshu Bajaj, responsible for the tuition center business; Mukut Deepak, in charge of business operations for Classes 4 to 10; and Cherian Thomas, who held the role of Senior Vice President overseeing the edtech's international operations.
Previous layoffs at BYJU'S
It is important to highlight that this upcoming restructuring at BYJU'S follows a series of similar actions in the recent past. Earlier this year, the edtech company reduced its workforce by approximately 1,000 employees, and in the latter part of the previous year, it implemented workforce reductions affecting around 2,500 employees.
Additionally, the company also undertook layoffs within its group companies, WhiteHat Jr and Toppr, affecting approximately 600 employees.
Cash crunch and growing debt
Over the past several months, the edtech leader has been grappling with a financial constraint. To meet the repayment obligations of its Term Loan B (TLB), the company opted to divest two of its significant assets, Epic and Great Learning. This strategic move was aimed at generating a cash infusion estimated to range from $800 million to $1 billion, as previously reported by Business Today.
Investor and regulatory scrutiny
In recent months, the company has come under increased scrutiny from investors and regulatory bodies. In July, Deloitte Haskins & Sells, the company's auditor, resigned from its position, citing difficulties in obtaining the necessary cooperation from the edtech company to prepare its financial reports.
Following the auditor's resignation, representatives from the three largest investors in the edtech firm, namely Prosus, Peak XV Partners (formerly Sequoia India), and the Chan Zuckerberg Initiative, also stepped down.
Additionally, BYJU'S faced regulatory pressure from the Employees' Provident Fund Organization (EPFO) after laid-off employees alleged that the company had been deducting provident fund contributions from their salaries but had failed to deposit these funds with the EPFO. Subsequently, the EPFO initiated an investigation into the company's practices, and BYJU'S subsequently deposited the outstanding employee dues.
Fundraising and valuation
The edtech giant has secured a cumulative funding sum of $5.8 billion from a diverse group of investors, including Qatar Investment Authority (QIA), Sumeru Ventures, Vitruvian Partners, BlackRock, Chan Zuckerberg Initiative, Sequoia, Silver Lake, Bond Capital, Tencent, General Atlantic, and Tiger Global.
At its zenith in 2021, the company held a valuation of $22 billion, earning the distinction of being the world's most valuable edtech firm and India's most valuable startup. However, since that time, several investors have devalued the company in their financial records.
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