SUMMARY
Unacademy CEO Gaurav Munjal cites offline pivot, and harsh economic conditions as the reasons for the layoff exercise
Munjal said that despite controlling operational spends and limiting marketing budgets, the edtech major needs to keep optimising for unprecedented times
Unacademy had fired around 1,500 employees this year before the latest round of job cuts
The layoffs in the country’s struggling edtech sector refuse to end, with Unacademy deciding to go for another round of layoffs which would affect around 10% of its workforce.
In an internal email sent to employees, Unacademy CEO Gaurav Munjal cited harsh economic conditions, the need to build efficient systems for the “unprecedented times”, and the offline pivot as the reasons for the layoff exercise.
“I am deeply saddened to share that we will have to say goodbye to some of our extremely talented Unacademy employees. These would be across the Unacademy Group from verticals where we have to take a difficult decision either to scale down or shut,” said Munjal in the mail.
He said that the startup’s HR team would send out detailed communication to the affected employees in the next 48 hours.
While the startup had earlier promised its employees that there would be no firings at the company, Munjal said market challenges forced the startup to reevaluate its decisions.
“Even though we realised this much earlier and took some stringent measures such as reducing our monthly burns, controlling our operational spends, limiting our marketing budgets and identifying other redundancies within the organisation, it was not enough. We need to keep optimising and building efficient systems for leaner and unprecedented times,” Munjal said.
Inc42 has reached out to the startup for an official statement. The story will be updated on receiving a response.
Meanwhile, Unacademy said that the affected employees will receive severance pay equivalent to the notice period and an additional two months. Munjal also said that the affected employees will get medical insurance coverage for additional one year and a supposed ‘dedicated’ placement support.
This is not the first round of layoffs at Unacademy. In March, as many as 125 ‘consultants’ from the unicorn’s PrepLadder team were sacked and let go. Close on the heels of that, the startup again fired around 210 educators as part of a cost restructuring drive.
Then, in April, the edtech unicorn again fired around 600 employees including its on-roll staff and contractual educators. Subsequently, in June, the Unacademy Group again laid off more than 150 employees, largely across sales and operations verticals.
The Edtech Space Collapses
Unacademy’s downturn has likely been triggered by the ongoing upheaval in the edtech space amid the ongoing funding winter.
The biggest hurdle for the Bengaluru-based unicorn has been mounting losses, which surged 85% year-on-year (YoY) to INR 2,848 Cr in the financial year 2021-22 (FY22). In comparison, the startup reported a consolidated revenue of mere INR 719 Cr in FY22.
The funding winter and tightening monetary policies have forced the edtech startup to re-evaluate its strategy. Unacademy also continues to bleed cash due to high customer acquisition costs and price intensive offline foray continue.
Even as Unacademy has shown the door to many of its employees, it still has teachers charging crores of rupees on its rolls. As part of its offline foray, it has also taken on legacy coaching giants such as Allen Career Institute to cushion the waning online user base. Despite the funding winter, Unacademy poached teachers from competitors at 2X-3X pay hikes, with annual income ranging between INR 1 Cr and INR 10 Cr for some educators.
As if this was not enough, reports continue to emerge that Unacademy is building a new product offering that could compete with LinkedIn.
This also follows Unacademy’s failure to scale close to a dozen startups that it has acquired in the past few years. While it has shut many of those startups, it continues to be straddled with others without any projections.
The new set of layoffs are emblematic of the ongoing churn in the Indian edtech space.
The last 24 hours have seen Poland-based edtech startup Brainly winding up its India operations and firing nearly all of its local team. Hours prior, Hyderabad-based edtech startup Practically laid off an undetermined number of employees amid a funding crunch triggered by a failed funding round.
According to Inc42’s layoff tracker, nearly 7,500 employees have so far been fired by edtech companies, including decacorn BYJU’S and other major players such as Vedantu.
While companies recklessly hired employees in 2021, the current year has seen edtech companies undertake major layoffs to cut corners. While employees have been pushed out in droves, there seems to be no brakes on experimentations that could guzzle millions of dollars in cash.
Amidst all these, what sticks out like a sore thumb is a clutch of issues from over-hiring to failed acquisitions and an unsuccessful multi-product strategy at the Gaurav Munjal-led company.
