Byju's Woes Worsen: What's Shaking Up The Edtech Now?

Rajnish Kumar and Mohandas Pai, the advisory board members of Think & Learn Private Limited (TLPL), the parent company of edtech giant Byju’s, will not renew their contracts set to expire on June 30, 2024. This will be another setback for the already troubled edtech.

Mutual Agreement to Conclude Advisory Role

Rajnish Kumar and Mohandas Pai, who have served as advisors for the past year, confirmed their departure in a joint statement.

"Our engagement with the company as advisors was always on a fixed-term basis for a year. Based on our discussions with the founders, it was mutually decided that the tenure of the advisory council should not be extended. Though the formal engagement concludes, the founders and the company can always approach us for any advice. We wish the founders and the company the very best for the future," they said.

Byju's has downplayed the significance of the advisors' departure, framing it as a routine change.

"Characterising a routine move as 'a setback' is exaggerated and attention-seeking," a company spokesperson stated.

Byju Raveendran, the company's founder and CEO, expressed gratitude for the advisors' contributions. "Rajnish Kumar and Mohandas Pai have provided invaluable support in the past year. The ongoing litigations by a few foreign investors have delayed our plans, but their advice will be relied upon in the ongoing rebuild which I am personally leading," Raveendran said.

Ongoing Challenges and Leadership Changes

Financial and Legal Issues

Byju's has been navigating a series of challenges, including financial reporting delays and legal disputes. In June 2023, auditor Deloitte Haskins & Sells resigned, citing delays in financial results. Subsequently, representatives from top investors—Prosus, Peak XV Partners, and the Chan Zuckerberg Initiative—also stepped down. Prosus, a significant investor, later revealed that Byju's executive leadership frequently ignored strategic and operational advice.

To address these issues, Byju's appointed BDO as its new auditor for five years and formed an advisory council that included Kumar and Pai. Despite these efforts, the company faces a cash crunch, ongoing legal battles, and a restructuring process that has seen significant layoffs and the consolidation of its business units.

Restructuring and Leadership Turnover

The company recently saw its India CEO, Arjun Mohan, resign after just over six months in the role. Byju's is now restructuring into three divisions: the online learning app business, online classes and tuition centers, and test preparation, each with its own head. Additionally, Byju's has significantly reduced its physical footprint, closing over 20 regional sales offices and retaining only its headquarters in Bengaluru.

Financial Disputes and Workforce Reductions

Byju's is also embroiled in a legal dispute with investors over a USD 200 million rights issue, leading to salary payment delays as funds remain locked due to the conflict. The company's rights issue, valued below its peak valuation of USD 22 billion, has been contested by investors including Prosus, General Atlantic, Sofina, and Peak XV Partners.

Workforce Impact

At its peak in 2022, Byju's employed around 50,000 people. However, ongoing restructuring has reduced the workforce to about 12,000. The company recently laid off approximately 500 employees as part of these efforts.

Recently, the edtech has begun the process of asking a section of employees to return to the office, signaling a potential re-evaluation of the company’s work-from-home strategy. 

The move comes after the bulk of the sales staff, who were placed on a revenue-linked payout model last week, reported difficulties in selling courses or subscriptions. This challenge, combined with Byju’s decision to lower the pricing of its educational offerings by up to 30%, underscores the financial difficulties the company is currently facing. Additionally, Byju’s is grappling with increasing attrition and mass resignations driven by negative perceptions of the brand and uncertainty around salary payments.

Office Consolidation and Operational Shifts

Earlier, Byju’s gave up nearly all its office spaces as leases expired, as part of a larger restructuring plan initiated by Mohan to reduce overhead costs and streamline operations amid financial pressures. Currently, Byju’s headquarters in IBC Knowledge Park, Bannerghatta, Bengaluru, remains the only operational office, apart from its 300-odd Byju’s Tuition Centres (BTC).

Byju's Slashes Fees and Hikes Sales Incentives Amid Strategy Shift

Edtech firm Think and Learn, owner of the Byju's brand, has reportedly cut course subscription fees by 30-40% and increased sales incentives by 50-100%. Founder and CEO Byju Raveendran, who is now overseeing daily operations, revealed the changes during a meeting with 1,500 sales associates and managers. Raveendran promised to settle all sales team dues and announced that sales associates will receive 100% incentives for closed sales directly into their accounts the next working day, while managers will receive 20% of the same. The new strategy aims for greater scalability and flexibility.

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