Reinforcing fears of a slowdown in the Indian edtech sector, Unacademy said it is letting go of 350 employees in another round of layoffs for the SoftBank-backed company.
In an internal email seen by DealStreetAsia, Unacademy cofounder and chief executive Gaurab Munjal said around 10% of Unacademy employees across the group will be impacted by the layoffs.
“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,” Munjal said, adding that, “Funding has significantly slowed down and a large portion of our core business has moved offline.”
This comes four months after Munjal sent a company-wide message that the company had Rs 2,800 crore ($352.33 million) in the bank, but he feels the startup is “not efficient” with handling finances. To cut “unnecessary expenses”, Munjal said Unacademy will shut down its global test preparation business, implement pay cuts for founders and management, impose travel restrictions on employees, and stop complimentary meals and snacks at their offices.
In May, Munjal had asked his employees to work under constraints and focus on profitability at all costs. “We are looking at a time where funding will dry up for at least 12-18 months. Some people are predicting that this might last 24 months,” wrote Munjal in an email at that time.
In the first round of layoffs in March this year, Unacademy fired over 100 employees from its PrepLadder team amid a “restructuring” of the organisation. Next, in April, the company let go of around 600-800 employees from its sales and marketing team, along with a few contractual staff and educators or tutors. Again in June, it fired 150 employees following a performance improvement plan.
In his latest message to employees, Munjal said, “I want to apologise to everyone sincerely since we made a commitment of no layoffs in the organisation, but the market challenges have forced us to reevaluate our decision.”
While the pandemic came as a shot in the arm for the edtech industry, leading to many funding rounds by startups, it is now feeling the pressure as schools have reopened amid a volatile market led by inflation, the Russia-Ukraine war, fund crunch, and stock market crash.
Not just Unacademy, the slowdown has led to a host of well-funded companies such as BYJU’s, Vedantu, Uday, Lido Learning, Crejo.Fun, and SuperLearn either shutting down or laying off employees. Last month, BYJU’s laid off 2,500 of its employees.
Unacademy, which is one of the most well-funded edtech startups, was founded by Munjal, Hemesh Singh, and Roman Saini in 2015. Its operating revenue surged by 80.7% to Rs 719 crore in FY22 from Rs 398 crore in FY21. During the period, the firm’s losses spiked over 85% to Rs 2,848 crore from Rs 1,537 crore in FY21.
Last week, Munjal claimed on Twitter that the company’s monthly burn is down from $20 million to $7 million.