Byju’s India CEO Arjun Mohan Announces Yet Again Workforce Reduction Of Over 4500; The Sword That Hangs On Byju’s Employees Every Couple Of Months!
Arjun Mohan, the newly appointed CEO of Byju's India, has unveiled a sweeping plan to restructure the edtech giant, which includes substantial job cuts, again. This move is aimed at addressing the company's financial challenges and creating a leaner, more profitable organization. However, if one remembers, a month back came the news regarding the promoters of Byju's, including Byju Raveendran, his wife Divya Gokulnath, and brother Riju Ravindran, having sold shares worth approximately $408.53 million in 40 secondary transactions since 2015, according to research and data platform PrivateCircle. Byju's was facing several challenges, including board resignations, legal issues related to a $1.2 billion loan, talks of offshore funds, and delays in releasing financial statements. What happened here?
Arjun Mohan Takes The Helm At Byju’s With Ambitious Restructuring Plans By Announcing Yet Another Round Of Layoffs
Arjun Mohan, who recently assumed the role of CEO for Byju’s India, has wasted no time in making bold decisions aimed at reshaping the future of the edtech company.
Among the most significant changes on the horizon is a substantial reduction in the workforce, targeting over 4,000 employees, equivalent to one-third of the company’s headcount; the restructuring effort comes as Byju’s grapples with financial challenges and strives to streamline operations for long-term sustainability.
These changes are expected to be rolled out later this week or early next week, as Mohan, in his second stint at Byju’s, discusses the merger of several business verticals with senior company executives.
The job cuts will affect both permanent and contractual staff members at Think & Learn, the parent company of Byju’s. Significantly, these layoffs are not associated with any of Byju’s subsidiaries, but many senior positions within the firm will become redundant.
The final size of Byju’s India workforce may still vary as different teams assess the impact of these changes. Notably, these job cuts are confined to the Indian unit, and subsidiaries like Aakash and international branches will remain unaffected, at least for now.
Byju’s, which once had approximately 52,000 employees in 2021, currently retains over 35,000 workers, having undergone multiple rounds of job cuts over the past year to address its financial challenges.
Who Is Arjun Mohan?
Arjun Mohan, an alumnus of IIM Kozhikode, rejoined Byju’s after previously serving as its Chief Business Officer; he also sits on the board of directors at Sharekhan and Mom’s Co.
With over a decade of experience, Mohan holds an MBA from IIM Kozhikode and a bachelor’s degree in Electrical and Electronics Engineering from the National Institute of Technology (NIT) Calicut.
“It was no surprise that I joined him to revolutionize education more than a decade ago. And it is no surprise either that I return to Byju’s today, when technology is poised to play an even more important role in making education truly personalized. While challenges are aplenty, I am ready to play my role in helping Byju’s empower our current and future generations to thrive in a rapidly changing world,” says the new CEO.
Yet Another Restructuring
A renewed focus accompanies the restructuring at Byju’s on profitability, or so is the viewpoint of the new CEO; this entails sharpening the company’s focus on profitable businesses within its two primary verticals.
The strategy includes attracting more students to offline centers as a sustainable operational approach.
What’s Different This Time
Notably, this round of job cuts differs from previous ones as it targets senior roles, aiming to create leaner structures and reduce costs, particularly given the high salaries of some senior executives hired during the peak of the pandemic-driven online education surge.
Byju’s is currently in the final stages of a business restructuring exercise, which aims to simplify operating structures, reduce the cost base, and improve cash flow management.
Arjun Mohan, is expected to complete this process in the coming weeks, steering the company toward a revamped and sustainable operation.
Byju’s has narrowed its focus to the last two remaining verticals in its India business, namely K-12 and test preparations, with other internal verticals being merged into these two categories.
This consolidation includes merging Byju’s Tuition Centre, live programs, and home tuitions into these broader verticals.
In recent developments, Byju’s announced the consolidation of four verticals into two, focusing on K-10 and exam preparation, though specific details were not disclosed. Profitable segments such as UPSC, CAT, GATE, NEET, and JEET will be the primary areas of focus.
As part of the restructuring, Asheesh Sharma, who led the 11th and 12th business, including JEE and NEET preparation, is among the executives leaving the company. These job cuts are expected to alleviate internal cost pressures while Byju’s concurrently works to resolve its $1.2 billion term loan B dispute with creditor Davidson Kempner.
Negotiations to settle the breach of a loan covenant linked to Byju’s-owned test preparation subsidiary, Aakash Institute, are ongoing.
Byju’s is actively pursuing negotiations and sales processes as part of its key priorities. Additionally, the company is preparing to release its audited financials for FY22 after a significant delay in filing its FY21 results.
Byju’s is still in possession of $550 million from the term loan B and hopes to generate cash by selling assets like Epic and Great Learning.
Furthermore, Byju’s is expected to appoint a new CEO for Aakash Institute, having formed an executive council for the purpose following the departures of CEO Abhishek Maheshwari and CFO Vipan Joshi.
The Viewpoint
While the new restructuring plan and the appointment of a new CEO may seem promising yet, one cannot help but wonder what happened to the earlier news of –
So let us refresh a bit:
- Byju’s, the edtech giant, has seen its promoters sell shares worth around $408.53 million in 40 secondary transactions since 2015, according to research platform PrivateCircle.
- However, a spokesperson for Byju’s clarified that the proceeds from these sales were reinvested back into the company to fuel its further growth.
- The secondary share sales often occurred at a discounted valuation compared to the company’s primary valuation at the time of the sale, with an average discount of 53% observed during the Series F round.
- While the promoters have indeed sold shares in the secondary market, claiming to reinvest the proceeds, it is unclear why the company faces issues with salary payments and EPF contributions; thus raising questions about the financial management and allocation of funds within the organization.
The Last Bit, Arjun Mohan’s decisive actions as the new CEO of Byju’s India do not send any different signals from what Byju’s strategy was earlier; job cuts, whether at a lower or senior level, are not a sign of innovative strategy.
The planned reduction of over 4,000 jobs is Byju’s commitment to addressing its financial difficulties, focusing on profitability while restructuring its operations, such that Byju’s emerges as a leaner, more resilient organization poised for sustainable growth – but at whose cost?
