InvestorQ : What exactly is the problem with Byju’s when Edtech was doing so well all along?
Anu Biswas made post

What exactly is the problem with Byju’s when Edtech was doing so well all along?

Ria Jain answered.
2 months ago

In the case of Byju’s it does look like there seems to be a lot going against them. Just recently, Byju’s saw its indicative valuation based on the last round of funding, soar to $22 billion. Somehow valuations seem to have peaked out at those levels and a number of problems have manifested in different forms. You can almost say that it is a case of reality biting back. One of the most classic indications is that Byju’s is rationalizing in a big way, both in terms of operating costs and also in terms of manpower.

Byju’s has recently laid off about 500 employees from the rolls of its group companies; Whitehat Jr and Toppr. However, market reports suggest that this may just be the proverbial tip of the iceberg. Apparently, over 2,500 persons may have been laid off across its parent as well as its other recent acquisitions. The idea here is to drive for cost efficiency. Byju’s and the management have been tight-lipped about the episode, but the layoffs have apparently been cutting across various department functions.

Many of the aggressive plans laid out recently by Byju’s are currently in the back burner. The focus right now is on trimming costs and nothing else. Reports suggest that more than 2,500 persons across group companies may have already been terminated. However, many more have been subtly asked to resign by offering inconvenient postings, forced work-from-home etc. It is trying to optimize its team size, quality and strength across. As funding taps dry up, Byju’s does see funding sources drying up rapidly.

There are some more indications on this front. For instance, Byju’s just pushed back payments for its $1-billion acquisition deal struck for Aakash Training. The deal was struck last year but apparently the company is having second thoughts. Byju’s has paid top dollars for a slew of global acquisitions across the US and Europe and integrating them has been challenging. Key acquisitions of Byju’s in last few years include some of the marquee Edtech names like Toppr, Whitehat Jr, Aakash Training etc.