Byju's Plans to lay off 500 more employees as part of business Strategy

Byju's Plans to lay off 500 more employees as part of business Strategy

Renowned edtech platform BYJU’s has recently begun their layoff operation and already they have removed 500 employees as part of their business restructuring exercise, which  was announced in last October.The laying off session was started two weeks ago, with a primary impact on the sales function teams, they also said that, after adding up the firm estimates another 1,000 to 1,500 job cuts in a worst case scenario but the company is hopeful that it may not have to resort to these.In October 2023, when the new CEO Arjun Mohan undertook the responsibility, BYJU’s had announced a business restructuring exercise to simplify operating structures, reduce the cost base, and for better cash flow management.

According to a spokesperson, BYJU’s had estimated the business restructuring exercise to impact a maximum of 4,500 jobs at the time. Since that time, BYJU’s already cut approximately 2,000 jobs in October 2023 and another 500 now in the latest round, as per sources. This action of the company depicts that another 1,000-1,500 jobs may still get affected in the coming months, in a worst case scenario for the company.

One of the spokespersons of the company directly related to the matter, quoted, “4500 was the number we were looking at. Capacity utilization was not there for a lot of people. With acquisitions, there were a lot of duplications of resources. At good times, we tried to go along with everyone. Now, we are forced to do the restructuring to break even and lower the burn.”

In a media statement, Byju’s informed, “We are in the final stages of a business restructuring exercise announced in October 2023 to simplify operating structures, reduce the cost base, and better cash flow management. As you are also aware, we are going through an extraordinary situation in the company because of the ongoing litigation with four foreign investors, where every employee and the ecosystem is going through tremendous stress, given the present circumstances. We regret the unfortunate situation the company has been forced into."

The company assured that, they will soon take the situation in control with $200 million rights issue. The company’s media statement further added, “We request everyone understands of the individual and collective stress on the system, which might be prompting some unforeseen situations for the departing employees.”

The troubled edtech company has already laid off over 10,000 employees in the last two years amid financial strains. BYJU’s blamed on a group of foreign investors who have challenged the company’s $200 million rights issue. The edtech, which touched a peak valuation of $22 billion in March 2022, had announced a fund raising of $200 million through a rights issue at a 99% lower valuation. However, BYJU'S miffed investors called an EGM on February 23, 2024, to oust its founder CEO Byju Raveendran and his family members over "mismanagement and failures."

BYJU’s held a EGM last week to secure the nod of the shareholders to increase the authorized share capital to enable the rights issue, and the court will now hear the matter on April 4. Until the matter is disposed of by the court, BYJU”S has been directed to keep the rights issue money in an escrow account.

According to the media report, Byju Raveendran already informed the shareholders that the board was considering making a renounced shares offer to investors that could help prevent any dilution of their shareholding. However, investor sources indicated that they are unlikely to participate in any such offer at the moment.