With schools, colleges and coaching centres returning to offline classes, the edtech sector start-ups seem to be feeling the heat. On Wednesday, online learning platform, Vedantu laid off employees for the second time during the month, firing 424 of its 5,900 employees — around 7% of its workforce. Earlier this month, Vedantu had laid off 200 employees.
The latest round of firing came to light through an internal email of CEO Vamsi Krishna, who noted that offline models are picking up.
Vedantu is not alone in this exercise. In the past few months, Unacademy had laid off around 1,000 employees. Earlier this month, Byju’s laid off around 800 employees of one of its unit, White Hat Jr. In February, another similar platform, Lido Learning had let go of around 150 of its employees before shutting shop.
Most of these edtech start-ups have now started looking at offline classes in search of fresh revenues.
For instance, Byju’s had in February announced its foray into offline tuition centres with a planned investment of up to $200 million. Prior to it, it had launched 80 offline centres as part of a pilot programme with plans to open at least 500 new centres across 200 cities during the current year.
“Currently, the external environment is tough. War in Europe, impending recession fears, and Fed interest rate hikes have led to inflationary pressures with massive correction in stocks globally and in India as well. Given this environment, capital will be scarce for upcoming quarters,” Krishna wrote in his mail.
He said that with Covid tailwainds receding, schools and offline models opening up, and the hyper growth of 9X that Vedantu experienced during the last two years, will get moderated.
“At a personal level, I find it gut-wrenching to live through such a decision and to feel that somehow my decisions have led to such consequences. There is no way around this thought. The way I deal with it is to imagine this as a sacrifice for all of us so that Vedantu can continue on its journey of reaching million more and making quality teaching reach them,” Krishna wrote in his mail.
He said that health benefits for the employees and their families would be available until August 5, 2022. Voluntary outplacement service support, including help on resume building, preparing for interviews and other training would be available to the employees who face the brunt of this decision.
Krishna assured this was a one-time activity with no further cycles of firing, and from now on Vedantu will focus on growth and efficiency.
“This has been an extremely difficult call to make, and I want each Vedan to understand why V had to take this call and what it means to you and the future of Vedantu. The journey has been endearing, we have seen some great days, a few good days and bad days. But, today I am writing to you on one of the toughest decisions V had to take over the past many years. It is days like these that are heartbreaking and I hope to never see them again,” he wrote.