In a situation that looks scaringly similar to the much storied Better.com saga, Indian edtech unicorn Unacademy has laid off nearly 600-800 employees in a bid to bring down costs. The cost-cutting exercise, which has impacted both full time employees as well as contractual educators, comes amid indications of maturing fundraises at higher levels as well as push from investors to see profitable business models.
Multiple media reports are quoting varied numbers. According to an Economic Times report, nearly 300 of the total lay offs are contractual educators, with the rest of the victims largely being employees across the sales and business development functions. In an official statement sent to The Tech Portal, Unacademy says the number is “less than 600”, and that “In an organization of 6000+ across the group, this is less than 10% of the workforce”. This includes employees at Unacademy group firm Prepladder, which it acquired in 2020.
The statement further adds, “Based on the outcome of several assessments, a small subset of employee, contractor, and Educator roles were re-evaluated due to role redundancy and performance, as is common for any organization of our size and scale. The vast majority of roles impacted has been a result of that process, and the efficiency we aim to drive in the broader business.”
Edtech unicorns in India, numbers of whom have seen exponential rise, have increasingly come under scrutiny due to their cash burn models. Many have compared the fundraising and subsequent unicorn-turning spree to the infamous US dotcom bubble. A whole bunch of Indian edtechs turned unicorn with multi-million dollar rounds, as investors — including marquee ones — showed signs of FOMO for a sector that achieved rare aggressive expansion during the COVID-19 pandemic.
Unacademy, at least till date, was still being considered among those who were clocking decent numbers. The company itself claims over 50% YoY growth and EBITDA percentage “also getting better”. It is eyeing profitability by Q4 of this year in its core business. The ET reports states a monthly cashburn of nearly $15 Million, which the company now wants to reduce.
But once again, little to no regulatory oversight and unethical work cultures at these fast-growing companies are into limelight. BharatPe was a prime example that came up very recently, and employee stories from the Unacademy lay off paints another grim picture. While speaking to Economic Times, some of the employees said that the internal communication channel on Slack abruptly stopped for them on March 30-31. This was followed by an email from the HR department asking them to join a link where they were told about being fired.
The staff told ET they were given an hour to accept the company’s offer of two months’ severance pay. The company hasn’t helped in any sort of outreach to look for new jobs, they said. Several employees have also highlighted increased work culture toxicity, with increased pressure of working 12-14 hours a day.
These layoffs comes months after Unacademy had raised a massive $440Mn round at a $3.4Bn valuation, in August of last year.