Byju Raveendran, CEO of Edtech major BYJU's, rendered an unconditional apology to 2,500 of his employees in an internal email as the unicorn is set to aim for profitability by the end of FY23 and lower costs.
"I realise that there is a huge price to pay for walking on this path to profitability. I am truly sorry to those who will have to leave BYJU's, it breaks my heart too. I seek your forgiveness if this process is not as smooth as we had intended it to be. While we want to finish this process smoothly and efficiently, we don't want to rush through it," the CEO has said in an email to his employees.
The mail addressed to employees comes as the company is facing backlash on social media for laying off thousands amid restructuring. Employees in BYJU’s Bangalore and Trivandrum offices have been asked to resign and terminated respectively, according to media reports.
Problems with management, reason behind crisis
Edtech entrepreneurs and educators who have been observing the growth of edtech platforms, including BYJU’s, Unacademy, Vedantu, all of whom have been under criticism over firing sprees in their organisations, believe that the situation has been caused by years of irregularities that have plagued the edtech industry.
Individuals who have worked with the edtech industry in the capacity of being investors and employees have blamed the current model that the platforms operate in being the primary reason behind its current state.
“This is the result of education being treated as a business and now they are paying the price,” said Dr. Aniruddha Malpani, who has been an angel investor for many edtech platforms and has been vocal about the practices employed by them. “There’s no separation between free platforms and majors which is why salespersons are having their targets increased and the companies are bleeding money which has led to a vicious cycle,” added Malpani.
While addressing the soon-to-be-fired employees, Raveendran alluded to the fact that external macroeconomic conditions are partly to blame for the sudden move. "We are working hard towards achieving profitability at the group level in this financial year itself," Raveendran wrote. "Our rapid organic and inorganic growth has created some inefficiencies, redundancies, and duplication within our organization, that we need to rationalize to realize this,” he added.
The development comes close to BYJU’s participation as an official sponsor of the FIFA World Cup Qatar 2022, which will take place from November 21 to December 18, 2022.
BYJU's financials in question amid more borrowing
BYJU’s financial decisions come amid the absence of a global Chief Financial Officer (CFO) as it booked a loss of Rs 4,588 crore for the financial year ended March 31, 2021, 19 times more than the previous year, according to its latest financial report. And that’s where the questions about its financials have been raised.
The edtech major's parent company, Think and Learn, has taken an unsecured loan of Rs 300 crore from Aakash Educational Services according to media reports. Aakash which is a wholly-owned subsidiary of the group was acquired in April 2021 for a cash and stock deal valued at $950 million.
2022 not the same as 2020-2021
Edtech entrepreneurs believe that BYJU’s firing of employees can also be attributed to its lesser need for resources post the pandemic, a duration which helped many online education companies to attract students. “Between 2020-21, a lot of capital was pooled in to hire resources as students were not going to schools now since the latter has started, redundancy has come in,” said Aravind Padmanabhan, the co-founder of Gaggle, an edtech platform catering to K12 students.
Entrepreneurs believe edtech biggies are not able to be innovative and separate themselves from schools and tuition classes. “The renewal rate is really poor for edtech platforms and the supplementary content rendered to you is similar across the board but parents subscribe to it on the fear of losing out only to realise that students are not interested,” said Padmanabhan, who added that people know the model much better now in terms of price.
Possible solutions to curb the Edtech crisis
Amid the edtech sector’s continued struggle, the future of its employees is in peril but experts believe there are possible solutions to fix certain loopholes.
“If the Govt of India can mandate a fixed monthly subscription model for edtech platforms rather than parents having to dole out lakhs on a certain contract, the sector can witness efficiency in its products,” said Malpani. While a measure that directly affects one’s pockets can be a short-term measure, according to others. “To stop the current resignations and firings, pay cuts across the board can be a fix, they can dilute their stakes but it can’t ultimately save all the jobs,” added Abhishek Ramanuja, an educator and founder of learn with comics, who has previously worked with edtech companies.
FPJ is expecting a response from BYJU's soon, on some of the questions it has sent, and will update the story accordingly.
What will be the future of Edtech?
Edtech and tutoring platforms, such as Unacademy and Vedantu have fired more than 600 employees each, joining BYJU’s in the club. While speaking to the Free Press Journal, an official with Unacademy stated that while they understand the pain employees go through, “difficult times need difficult measures.”
Can Edtech survive during such times and in the future? Education experts such as Meeta Sengupta believe they can. “Edtech will grow as the user base recognises three facts: One, accessibility as evidenced in the pandemic. Two, the ability to customise to all abilities which we shall see improve in the coming decade with the first steps into the metaverse. Three, the ability of edtech to actually meet the goals of education as a public good - if it works towards that goal,” said Sengupta, who added that built like a quick returns business, edtech should reframe goals to achieve its true potential.
