Edtech unicorn Vedantu is laying off some employees and implementing pay cuts for its leadership, even as domain cutting start-ups prepare for a much harsher business environment.
The Bengaluru-based company is in the process of laying off around 385 employees, while the leadership team, including the founders, will take a 50 per cent pay cut, people aware of the development told Business Today.
Layoffs are being planned across business verticals, including content, teaching and human resources teams.
The development was first reported by start-up news website enter,
Vedantu had laid off around 600 employees earlier this year. In early May, the edtech firm sacked 200 employees and later in the same month, its founder and CEO Vamsi Krishna announced that the company was laying off nearly 7 per cent or 424 employees out of 5,900.
Krishna warned in an email to his employees during the layoffs in May that the Russia-Ukraine war, fears of an impending recession and Fed rate hikes would lead to a shortage of capital for the coming quarters, leading to inflationary pressures and domestic inflation. And there has been a massive improvement on a global scale. stock. He wrote at the time, “With the winds of Covid easing, schools and offline models opening up, the 9X hyper-growth Vedantu experienced during the past 2 years will also moderate.”
The company did not respond to BT’s queries.
Five months after the first round of layoffs, Vedantu has acquired a majority stake in test preparation platform Ace Creative Learning aka Diksha for $40 million (Rs 330 crore). The acquisition helped the company venture into offline coaching, which its rivals BYJU’s and Unacademy had already started looking for new revenue streams.
Diksha, which continues to operate as an independent entity, had approximately 950 employees at the time of the acquisition. BT could not confirm if the layoffs affect these employees as well.
Edtech has been in the news lately for being one of the worst hit sectors in terms of start-up layoffs. The sector has also seen business model changes, drastic cost-cutting and total shutdowns. Cumulatively, 11 edtech start-ups, including market leaders Byju’s, Unacademy and Vedantu, have laid off around 6,500 employees this year, according to Tracxn’s findings. Start-ups like Lido Learning, Uday, Crazo.Fun, Superlearn etc have ceased operations and Amazon has announced that it is shutting down its online learning vertical, Amazon Academy, in India.
Outside edtech, several start-ups across verticals including Ola, Chargebee, MPL, Meesho, Cars24 and Udaan have cut their workforce as funding is expected to shrink further and startups and technology are facing a slowdown due to the slowdown. Companies are cutting workforce, optimizing costs and significantly expanding their capital runway to survive this bearish cycle.