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vedantu: Edtech firm Vedantu cuts 385 jobs in fourth round of layoffs this year

Vedantu has laid off another 385 employees in its fourth round of layoffs this year, as the pressure to cut costs and turn profitable mounts on Indian edtech firms, multiple people told ET.

Vedantu’s cofounders and some senior executives have also taken a 50% pay cut, the sources added.

The company had previously laid off 100 full-time employees from its sales team in July and another 624 full-time and contractual employees in two batches in May.

“Employees in functions across sales, human resources (HR), learning and content have been affected by the recent layoffs,” one of the above persons aware of the discussions told ET. A Vedantu spokesperson declined to comment.

In total, the company has laid off over 1,100 employees this year, as covid-led growth has tapered off and the slump in late-stage funding has made it harder for Indian edtech firms to raise fresh funds.

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After the latest round of layoffs, Vedantu has about 3,300 employees.

Arch-rival Byju’s also announced a ‘rationalisation exercise’ in October, sacking 2,500 employees in one of the biggest layoff rounds by an Indian startup.

Last month, test preparation major Unacademy said that it was cutting as many as 350 jobs in its second tranche of layoffs this year. It had previously fired around 1,000 contractual and full-time employees, as ET reported in April.

In spite of these layoffs and austerity measures, Indian edtechs haven’t slowed down their offline forays. In October, Vedantu had acquired Deeksha, a test preparation platform for board and competitive exams, in a $40 million cash and stock deal.

Through the acquisition, Vedantu was looking to boost its hybrid teaching play. It got access to almost 40 offline centers across Telangana, Andhra Pradesh and Karnataka, and to Deeksha’s 13,000 students.

Entrackr first reported about the development on Wednesday evening.

As global macroeconomic conditions and rising interest rates continue to create uncertainty for large fundraises, Indian edtech firms have announced austerity measures and layoffs since the beginning of the year, anticipating delays in funding rounds.

This, coupled with a reopening of brick-and-mortar learning centers, has come as a double whammy, resulting in rising customer acquisition costs.

Indian edtech firms raised $6.6 billion in equity capital in FY21 on the back of growth spurred on by covid-19 and a shift to online learning.

According to a recent survey report by global strategy firm LEK Consulting and advisory firm DC Advisory, as brick-and-mortar opens up, net-promoter score (NPS) for segments including kindergarten to grade 12 (K-12) and test preparation segments have turned negative, with parents demanding better value and more offerings from edtech firms.

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