Byju’s, the world’s most-valued edtech startup, has faced financial challenges and increased tension with lenders, leading to the company implementing cost-saving measures, including layoffs. The company’s HR team conducted individual discussions with employees on June 16 to communicate the layoffs across various departments. Employees were asked to resign voluntarily on the HR portal, and their email addresses were deactivated. Some employees received communication about the layoffs starting from June 14.
According to sources, the number of layoffs is expected to be over 1,000 and will predominantly impact senior employees who have been with the company for more than two years. Byju’s is aiming for profitability and has planned to provide impacted employees with two months’ salary (for June and July) and a full and final settlement by September-October. However, no additional severance will be given thereafter.
The layoffs come after Byju’s skipped paying $40 million in interest on a term loan B it had raised in November 2021. The company filed a case against one of its lenders in the New York Supreme Court, accusing it of predatory practices. Byju’s is currently in discussions with the lenders to reach a resolution.
Furthermore, Byju’s is facing financial difficulties and is yet to close a funding round to alleviate its financial woes. The company is looking to raise $700 million in equity and has raised about $250 million in structured instruments from Davidson Kempner. However, the funds have not been wired in as they are yet to be filed with the Ministry of Corporate Affairs.
To achieve cost savings, Byju’s has implemented various initiatives, including holding back or delaying certain advances such as variable pay. The company has not conducted appraisals and has withheld other incentives for employees. Some employees who were laid off claimed that they were terminated before receiving their variable pay, while others mentioned that their provident fund contributions were not reflecting in their accounts.
While laying off employees, Byju’s has also been hiring freshers and juniors at lower packages to ensure the continuity of day-to-day operations. The company has been actively hiring Business Development Associates (BDAs) or sales executives at packages that are approximately 70% lower. Byju’s states that the hiring of employees at lower packages is a result of changing sales tactics and the shift to remote work, rather than an aggressive cost-cutting measure.
Byju’s has faced several challenges, including accounting irregularities, tussles with lenders, mass layoffs, and mounting losses. The company’s offices were searched by the Enforcement Directorate in April under the provisions of the Foreign Exchange Management Act. Byju’s is yet to file audited results for FY22. Additionally, Byju’s fair value has been marked down by BlackRock, currently valuing the company at $8.4 billion, significantly lower than its previous valuation of $22 billion.
Founded by Byju Raveendran over a decade ago, Byju’s has raised over $5 billion, primarily in the past five years.
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