This is the third time the Bengaluru-based edtech unicorn laid off employees since May 2022
Edtech unicorn Vedantu has handed out pink slips to 100 employees, which is the third time the company has laid off people. It had fired 624 full-time and contractual staffers in two batches in May 2022, which comprised 10 per cent of its workforce.
According to media reports, the start-up has let go of people from its sales and training teams as part of its restructuring exercise. The online education platform's CEO, Vamsi Krishna, stated this was one of the "toughest decisions" the company had to take in light of a "tough external environment". This was exacerbated by the "war in Europe, impending recession fears, and Fed rate interest hikes … along with inflationary pressures with massive correction in stocks globally and India".
He added that "capital will be scarce for upcoming quarters. With COVID tailwinds receding, schools and offline models opening up, the hyper-growth of 9X, Vedantu experienced during the last 2 years will also get moderated. For the long-term sustenance of the mission, V would need to adapt too."
During the pandemic months, edtech companies successfully and quickly onboarded new customers. This growing subscription base led to a steady stream of capital from investors, and start-ups started hiring in droves to keep pace with their aggressive expansion plans. These have now hit a roadblock with the reopening of physical schools and coaching centres.
The edtech sector , once the shining star of India's start-up firmament, is getting frostbite from the ongoing funding winter. According to a PricewaterhouseCoopers report, investment in this space declined by 50 per cent in the April to June 2022 quarter. It attributed this decline to a global slowdown, decrease in tech stock valuations, inflation and geopolitical instability.
The lengthening funding runway and resumption of offline educational institutions have seen many edtech companies take stringent measures to rein in their costs. One of these includes letting go of people.
So far, edtech companies have laid off close to 6,000 employees since the start of 2022. Lido Learning started the juggernaut by asking over 1,200 employees to resign during a virtual town hall meeting in February 2022, citing a 'financial crisis'. Softbank-backed Unacademy has laid off 750 employees from its sales and marketing team and some of its contractual educators.
Byju's too claimed to have laid off over 500 people at Whitehat Jr and Toppr, while Frontrow and Udayy sacked 300 and 110 people, respectively. Udayy's co-founder Saumya Yadav announced that the company would shut down its operations and return the remaining $8.5 million capital to its investors. The start-up took this decision after online business in the K-12 segment became challenging with the reopening of schools and dropping user rates.
Eruditus, too, let go of over 80 people in June 2022. While it had hired around 1300 people in 2021, spurred by interest in online education, it was likely to onboard around 120 employees across critical functions this year.