Is the Indian EdTech Bubble Bursting Already?
The latest to announce a layoff is WhiteHat Jr., acquired by Byju's in 2020, which let go of 300 members of the code teaching staff and sales
Ever since ed-tech captured the mindspace of a pandemic-stricken and locked down world, the question on everyone’s mind is – is this a bubble? Once the world began to unlock, these fears appear to be coming true as company after company is laying off staff to reduce cash burn.
The latest to dish out pink slips is code-learning platform WhiteHat Jr, a brand that Byju’s had acquired in 2020 amidst much fanfare. Now, WhiteHat Jr. has laid off 300 full time staffers in the code-teaching and sales teams. In case you wanted proof of money mispent, you needn’t go any further.
And if you do, you may find that of those sacked, 80 are located in Brazil, a geography that Byju’s entered last April amidst much fanfare around its “Future School” offering. Looks like the future just got bleaker in an industry that took inspiration from the likes of Khan Academy and decided to throw VC money to bulk up demand.
Remember, Byju’s had paid $300 million for this acquisition in the August of 2020. Media reports quoted a spokesperson for WhiteHat Jr. as saying that the layoffs were part of “optimising their team to accelerate results and best position the business for longterm growth.” In other words, they had overestimated their abilities and now blame those whom they fired.
For number crunchers, WhiteHat Jr posted a loss of Rs.1,690 crore in FY2021 on a revenue of Rs.489.9 crore and expenses of Rs.2,175 crore. This one appears to have bitten the dust, but there’s more worrisome news. A Bloomberg report said Byju’s has delayed payments to its largest acquisition yet – Akash Educational Services – acquired in April 2021 for $950 million.
In the recent past, several edtech companies such as Unacademy, Lido Learning and Vedantu have laid off staff for the one obvious reason – they want to lengthen the runway in terms of sustaining for some more time. However, it isn’t clear why they would want to do so as the edtech business model hasn’t really set things alight post the pandemic recovery.
Maybe, that’s exactly what they are seeking to do. Create a hybrid model of brick and mortar entities wrapped around by a digital web. Edtech firm FrontRow let go of 145 employees, which accounted for 30% of their workforce while Udayy shut down its operations completely over low demand for online learning.
Now we are hearing that the big guns such as Byju’s and Unacademy plan to offer offline classes to students. However, there’s little clarity over how these companies plan to expand their physical infrastructure and the model that it could follow. Most of these companies may still have cash to burn, but the question is should they spend it on bricks and mortar?
Or is there some subtle franchise model that could be created out of their current predicament? We need to wait and watch.
