Is the sheen fading in the Byju’s Edtech story?

Is Byjus losing its sheen?

by 5paisa Research Team Last Updated: Dec 13, 2022 - 10:21 am 23.2k Views

In the world of business, there is a difference between a pause and a halt. What we have believed all along is that the Edtech sector is up against a pause. In the enthusiasm to grow, the sector perhaps added resources too fast and is now streamlining and rationalizing. That is not bad, it is normal in any business. But in the case of India’s most wonderful Edtech company, Byju’s, there seems to be a lot going against them. Byju’s saw its valuation soar to $22 billion, but now it is a case of reality biting back. 

The news is official that Byju’s has been rationalizing manpower in a big way. Byju’s recently laid off about 500 employees at its group companies; Whitehat Jr and Toppr, but market trends suggest that more than 2,500 persons may have been laid off across its parent and its recent acquisitions. The move is aimed to drive cost efficiency. While Byju’s and the management have been tight-lipped about the episode, the suggestion is that the layoffs and cost cutting across various department functions could sharpen in days to come.

Just a year back, everything appeared to be going right. The company was planning a mega IPO in the US and later in India with a primary listing in the US and a secondary one in India. All these plans are currently in the back burner.  The focus right now is on trimming costs while reports suggest that more than 2,500 may have already been terminated with more people forced to resign with inconvenient postings, forced work-from-home etc. The priority for Byju’s right now is to optimize teams across group companies. 

The reason markets see trouble is that there may also be a financial crunch and a slowdown in the acquisition frenzy as the cheque books are vanishing. For example, Byju’s has just pushed back payments for an approximately $1-billion acquisition deal struck last year with Aakash Training. Byju’s paid top dollars for global acquisitions and integrating them has been anything but simple. Some of the major acquisitions of Byju’s in the last few years include marquee names like Toppr, Whitehat Jr, Aakash Training etc.

The high profile Whitehat Jr saw about 800 resignations after being asked to work from office. The real reason many of the Edtech companies have lost sheen is the reopening of schools and colleges. It has sparked a mini crisis in the edtech sector with falling valuations, slowing funding rounds and faltering investor sentiment. It is not just Byju’s but even Unacademy and Vedantu have laid off in large numbers. To add insult to injury, Lido Learning had to be shut down as it was no longer a viable model. Problems have just begun.

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