SUMMARY
Employees from sales, training, among other teams, were asked to leave: Sources
The latest round of layoffs comes almost a month after Vedantu laid off around 624 employees
As per Inc42’s layoff tracker, Indian startups have laid off around 11,460 employees in 2022 so far
Edtech unicorn Vedantu laid off around 100 employees in the month of July as part of a business restructuring process. Between July 4-9, Vedantu asked full-time employees from several teams to put down their papers, sources told Inc42.
The impacted employees were from teams including sales, training, among others. The startup will offer a two-month salary as severance pay, the sources added.
The fresh round of layoffs came as a surprise to most of the employees as they believed that there wouldn’t be any more layoffs in the startup. Vedantu told the impacted employees that the layoffs were part of an organisational restructuring process, the sources said.
Vedantu refused to comment on the development.
The latest layoff exercise was the third one at Vedantu in 2022 so far. Inc42 was the first to report on May 5 that around 200 employees were laid off by the edtech startup. The unicorn had confirmed the development to Inc42 then and said that 120 contractual and 80 full-time employees were asked to leave as part of a cost-cutting exercise.
A couple of days later, Vedantu cofounder and CEO Vamsi Krishna said on LinkedIn that the startup had let go of around 424 employees across teams, comprising 7% of its workforce.
The startup had around 5,900 employees in total in May. With the latest round of layoffs, the number of employees laid off by it in 2022 has increased to 724.
In a recent interaction (post the May layoffs) with Inc42, Krishna said that the startup’s focus over the last two years was on acquiring users, building new courses and ensuring that the customers stick to the platform.
However, as investors began tightening the purse strings in the backdrop of economic downturn in 2022, Vedantu had to cut costs which primarily included cost of delivering the service (teachers and streaming costs), sales cost, and marketing costs.
He acknowledged in the interview that with schools and colleges reopening, Vedantu was seeing a drop in the number of students using its platform. Krishna said that Vedantu was growing at 9X to 11X in terms of revenue and customer base during COVID years, whereas it witnessed a growth of 2X in pre-COVID years.
Vedantu, founded in 2014 by Krishna, Anand Prakash, and Pulkit Jain, Vedantu is an interactive online tutoring platform. In the interview, Krishna said that over 1 Mn students attend live classes every month on the platform with 2.1 Cr hours of live learning.
Vedantu claims to get more than 35 Mn users every month from 10,000+ cities and more than 57+ countries. The startup is also eyeing a public listing in 2024-2025.
Inc42 has also learnt that Vedantu hired around 500-600 sales employees in the past few months.
The edtech giant reported a multi-fold growth in its revenue at INR 134.9 Cr in FY21 as against INR 35.8 Cr in FY20, while its loss widened to INR 601.2 Cr from INR 150 Cr in FY20.
Its total expenses also jumped to INR 736 Cr from INR 185.9 Cr in FY20. The jump in expenses can be attributed to increase in employee benefit expenses, which is a clear indication of aggressive hiring between April 1, 2020 to March 31, 2021.
Layoffs Hit Edtech Space
The edtech sector received a boost during the pandemic as schools and colleges were shut, and became the favourite bet of investors. However, the sector, which raised funding of $4.7 Bn in 2021 across 165 deals and minted 3 unicorns, is now seeing the highest number of layoffs and resignations.
As per Inc42 layoff tracker, over 4,000 employees have been laid off across 12 edtech startups, including Unacademy, Toppr, WhiteHat Jr, Lido, in 2022 so far. The space has also seen two startups shutting their business – Udayy and Crejo.Fun.
Amid a decline in the number of students using their platforms, edtech startups are also entering the offline learning space. It started with BYJU’S coming up with the hybrid centres – BYJU’s tuition centres. Gaurav Munjal’s Unacademy quickly followed suit, starting Unacademy Centers in cities like Kota, Lucknow, Ahmedabad, Chandigarh among others, to teach offline.
While Krishna, in the interview, said Vednatu had no plans to go offline, he said going hybrid was on the table. Earlier this month, Vedantu launched its hybrid learning centre in Muzaffarpur in Bihar.
As per Inc42’s layoff tracker, Indian startups have laid off 11,463 employees in 2022 so far.
