The troubles at edtech startup Byju's don't seem to be ending anytime soon.The company recently made the decision to lay off approximately 900-1000 employees across multiple departments on June 16.
This latest round of layoffs follows a previous workforce reduction of around 2,500 jobs in October last year, which was part of the company's cost-cutting initiatives.
Despite an earlier email from Byju Raveendran, co-founder and CEO of Byju's, assuring employees that there would be no further layoffs, the company proceeded with the latest round of workforce reductions.
The current layoffs are a result of Byju's financial disputes with US lenders and its failure to make a $40 million interest payment on a loan.
- The latest layoffs are set to impact 2% of the company's employees. According to reports, senior employees who have worked for at least two years are likely to be impacted.
- Byju's has promised them two months of severance pay and the settlement of full and final by September and October.
- One of the laid-off employees Arpit Singh described his layoff and predicament in a LinkedIn post saying that he worked 24*7 for the company, but was still let go.
- Employees have been fired via in-person meetings, and phone calls and some have been asked to voluntarily resign through the HR portal.
- Byju's still retains a workforce of around 40,000 people.
- Some reports say that while the layoffs have been taking place, Byju's is replacing the employees with freshers on a lower package.
Financial woes of Byju's
- Byju's has been facing a recent wave of financial troubles, especially with regard to the $1.2 billion loan it had raised in November 2021.
- The term loan B (TLB) with US lenders has run into trouble after Byju's failed to file its financial statements in recent years, making lenders ask for $40 million in interest.
- Byju's had kept its US subsidiary companies as collateral for the loan and now the lenders want to usurp the control of these subsidiary companies.
- Now, Byju's had taken the issue to the New York Supreme Court accusing the US lenders of "predatory" practices.
- On the other side, Byju's had racked up a loss of a whopping Rs 4,588 crore for the financial years 2020-21.
- The loss is 15 times greater than the loss it incurred during 2019-20 which was at Rs 300 crore. This is despite the fact that during the pandemic period, demand for online education soared.
- The loan isn't the only issue plaguing Byju's. The increasing financial scrutiny has also attracted the attention of the Enforcement Directorate, which raided the edtech startup's offices in April with regard to FEMA violations.
- On the other side, Byju's has come under fire for its unethical and aggressive sales tactics like digging up the contact numbers of minors, threatening parents, trapping customers into bad loans and EMIs, refusing refunds, and more.