5 March 2024

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BYJU's Lays Off

BYJU’s Lays Off Close To 1,000 Employees Across All Departments: Sources

Byju’s, the world’s most valuable edtech startup, has begun laying off employees across divisions as a cost-cutting strategy in response to rising tensions with lenders.

On June 16, the company’s HR team held individual phone calls and in-person meetings at its offices to inform employees from various departments, including mentoring, logistics, training, sales, post-sales, and finance, according to multiple people familiar with the situation.

Following the meetings, staff were asked to voluntarily resign via the official HR portal, according to the people who requested anonymity. Employees’ email addresses were also disabled, and they were requested to provide official identification cards, according to the sources. According to sources, some staff began receiving notifications about the BYJU’s lays offs on June 14.

Byju’s, the world’s most valuable edtech startup, has begun laying off employees across divisions as a cost-cutting strategy in response to rising tensions with lenders.

On June 16, the company’s HR team held individual phone calls and in-person meetings at its offices to inform employees from various departments, including mentoring, logistics, training, sales, post-sales, and finance, according to multiple people familiar with the BYJU’s Lays Off situation.

Following the meetings, staff were asked to voluntarily resign via the official HR portal, according to the people who requested anonymity. Employees’ email addresses were also disabled, and they were requested to provide official identification cards, according to the sources. According to sources, some staff began receiving notifications about the BYJU’s lays offs on June 14.

“On Friday (June 16), employees were informed that it would be their last working day. There had been no previous correspondence. According to one of the workers stated above, “following some media reports, employees were constantly asking HR and their managers if there would be any BYJU’s lays offs, but we heard there wouldn’t be any.”

“After almost every development, employees receive an email from Byju Raveendran in which he states that there will be no more layoffs, that the company is doing great, and so on.” However, there have been at least two large rounds of layoffs since October, including this,” the person added.

According to another person quoted above, the number of BYJU’s lays offs will be in the thousands, with the majority affecting senior employees who have been with the edtech for more than two years.

Byju’s has refused to comment. According to a company source, these BYJU’s lays offs were made to achieve profitability rather than to cut costs.

According to reports, Byju’s intends to pay two months’ wages (for June and July) to all impacted employees and has committed to send a full and final payout by September-October, or roughly 45 days from July. The corporation will not provide any additional severance pay in the future, according to the HR department.

The decision to begin laying off permanent employees across departments comes just a few weeks after the company failed to pay $40 million in interest on a term loan B (TLB) it raised in November 2021, instead filing a case in the New York Supreme Court against one of its lenders, calling it “predatory.”

BYJU's Lays Off

Since then, the company has began talks with the lenders in an attempt to achieve an agreement. If the court rules in favour of the lenders, Byju’s will be forced to pay the $40 million immediately, as Moneycontrol previously reported.

In addition, the company has failed to close a capital round that will provide some respite to the company’s escalating financial troubles. Moneycontrol earlier revealed that Byju’s is aiming to raise $700 million in stock. The edtech has also raised around $250 million in structured instruments from Davidson Kempner, although this has yet to be lodged with the Ministry of Corporate Affairs (MCA), implying that the funds have not yet been wired in.

Holding certain advances

BYJU’s lays offs around 2,500 employees in October and stated that company aimed to be profitable by the end of FY23 (2022-23, the preceding fiscal year). However, the founder and CEO told Moneycontrol in a Davos interview that the company has not met that goal.

According to sources, the corporation has thus begun on a variety of cost-cutting initiatives, particularly on the staff front, such as holding back or delaying certain advances such as variable compensation. To be sure, Byju’s is still one of India’s largest private employers, employing over 40,000 people.

Employee benefit expenditures naturally account for the majority of the company’s spending. For example, according to FY21 (2020-21) figures, Byju’s personnel costs accounted for almost one-third of overall spending.

Byju’s has also not done appraisals and held back other incentives this year, employees said.

Employees claim that the corporation has also been BYJU’s lays offs workers because of the variable component of their pay. Moneycontrol met with one employee who stated he was supposed to earn variable pay in August after completing a year, but his position was terminated this month, therefore leaving him ineligible for variable pay. The employee receives approximately Rs 1 lakh in variable compensation.

Some recently BYJU’s lays offs employees also stated that, while they were receiving their salaries on time, their provident fund (PF) payments were not being shown in their PF accounts. Many sources has reviewed screenshots of various employees’ EPF accounts, which confirms this claim.

We couldn’t figure out why PF contributions weren’t being reflected right away. However, technical issues could cause a delay in contributions being reflected in employee PF accounts, according to industry analysts.

BYJU’s Lays Off: Revamping the workforce

While BYJU’s lays offs hundreds of employees and using other cost-cutting measures such as retaining incentives, it has also been employing freshers and juniors at lower pay rates to ensure that its day-to-day operations do not suffer.

According to current and former employees, the corporation is actively employing Business Development Associates (BDA), or sales leaders, for packages that are approximately 70% lower.

For example, the employee described above, whose annual salary was around Rs 8 lakh, was laid off, and a fresher was hired for a salary of Rs 3 lakh, according to the employee’s boss.

However, according to the source close to the company described above, Byju’s has been hiring at lower pay levels because the company adjusted its sales strategies and stopped sending sales people on the pitch.

“Because the company discontinued field sales late last year, employees were only required to work from home.” Naturally, the corporation employed workers at lower pay scales rather than aggressively cutting expenditures,” the person noted.

To be sure, Byju’s has been attempting to cut labour costs since last October. We earlier reported that after the corporation formally declared it was cutting off 2,500 employees, it sent performance notices to approximately 5,000 employees.

Byju’s also discontinued field sales earlier this year, thereby requiring its personnel to conduct sales meetings via video chats. The corporation then stated that the move was made to avoid misselling. Byju’s has come under fire for alleged misselling, prompting company representatives to meet with the National Commission for the Protection of Child Rights (NCPCR) in December.

According to a media article published earlier this month by The Morning Context, BYJU’s lays offs scene also fired part-time staff who were on third-party payrolls.

Other issues

Byju’s reached new heights in March of last year, when it raised a record $800 million round at a valuation of $22 billion. However, the corporation has been under scrutiny for a variety of reasons since then, including accounting issues, squabbles with lenders, large layoffs, and rising losses.

In April, the Enforcement Directorate, a financial investigation agency, searched Byju’s offices in Bengaluru under the provisions of the Foreign Exchange Management Act. The corporation has yet to file audited results for fiscal year 2021-22 (2021-22).

For FY21 (2020-21), Byju’s reported a significant increase in losses to more than Rs 4,500 crore, while sales fell somewhat, despite the fact that FY21 was the first year of Covid, which gave online learning enterprises a boost.

BlackRock, the world’s largest Asset Management Company (AMC), has reduced Byju’s fair value twice internally. BlackRock presently values Byju at $8.4 billion, which is approximately 62% less than the company’s previous valuation of $22 billion.

Byju’s, founded over a decade ago by former teacher Byju Raveendran, has raised over $5 billion, the majority of which has occurred in the last five years.