After Unacademy Had Laid Off 1000 Employees, Vedantu Fires 200

While the world appears to be breathing a sigh of relief at the coronavirus pandemic appearing to finally recede into the distance, there’s one set of people who aren’t celebrating — ed-tech companies.

Ed-tech unicorn Vedantu has fired 200 employees, ET reports. Around 120 of these employees were on contracts, while 80 were full-time employees. All the employees were from the company’s academic teams and worked as assistant teachers.

“We have over 6,000 employees out of which roughly 120 contractors and 80 full-time employees, or 3.5% of the total strength, were being reevaluated,” Vedantu told ET in a statement. “We have an annual contract with them and at the beginning of every academic year we follow a process of load rebalancing where we rejig these roles based on our growth expectations,” a spokesperson said.

Vedantu seems to be remarkably upfront about its layoffs, going on to explicitly speak of “growth expectations”. It had been widely expected that demand for online courses could normalize once the coronavirus lockdowns were over, and Vedantu appears to be admitting that there could be a slowdown in its business with the pandemic ebbing away.

And the company already seems to be preparing to adapt to the new normal. Vedantu says it has been focusing on slashing the cost of its courses to manage the tapering demand for online education as offline learning centres reopen. It says it is also leveraging technology to reduce overall costs, which is also one of the reasons for the restructuring exercise.

Vedantu had been founded in 2014, and connected students and teachers through online classes. It had been valued at $250 million at the beginning of 2020, but became a unicorn with a valuation of $1 billion in September 2021 after raising $100 million at the peak of the pandemic. Vedantu had then taken steps to grow its brand, and had begun aggressively marketing its services. The startup had signed on Aamir Khan as its brand ambassador, and has been playing ads featuring the Bollywood actor in the current edition of the IPL.

But the company now seems to have realized that it might have overestimated its growth potential, and looks to be scaling back through layoffs and cost-cuttings. A similar tale had played out at Unacademy, which had also become a unicorn during the pandemic, begun heavily advertising its services with stars including Sachin Tendulkar and MS Dhoni, and had even signed up as a sponsor of the IPL. Like Vedantu, Unaacademy is now cutting costs, and has fired nearly 1,000 employees over the last few weeks.

It remains to be seen whether these layoffs in the ed-tech space are one-offs, or just the beginning of a new trend as students return to offline classes. There are signs that demand for offline classes remains strong — over the last year, coaching institutes Aakash, T.I.M.E and Allen Career Institute have all seen interest from big-name investors, and raised large sums of money. And if ed-tech companies discover that students prefer in-person classes instead of their online offerings when they’re free to choose between the two, the pain for India’s entire ed-tech space might just be getting started.