Amid looming debt and a round of legal worries, Byju’s is set to lay off 1,000 employees to cut down on operational costs.
The latest round of layoffs will target the contractually hired sales team. This on-ground team are usually hired from third-party vendors like Channelplay and Randstad. Byju’s hires employees on a contractual basis as per their business demands.
Although sources peg the affected number at 1,000, there are no official reports that state the number of people being laid off. The company has also not made any statements.
Two lay-off rounds in one year
Earlier in the year, Byju’s had laid off 1,500 of its employees. It cited optimizing costs and outsourcing of operations as the reason behind the layoff.
Unlike this time, the earlier lay-offs took place throughout the company, in the product, content, media and technology departments. Reports say that among those affected, several top executives including senior vice presidents were let go.
The firing did not come as a surprise to employees. Back in October of 2022, the company revealed plans to fire 2,500 of its staff. Byju’s founder and CEO Raveendran has assured no more employees will be laid off than the stated number.
Bjyu’s trouble timeline
Byju’s has blamed their lenders for these moves. The company was in the news recently regarding its refusal to pay off the interest on a USD 40 million loan to lenders in the U.S.
The company raised a USD 1.2 billion loan from the overseas market in November 2021. Nearly a year later, in September 2022, the company reported a loss of INR 4.5 crores. A month later, it closed off another round of funding worth USD 250 million in October 2022.
The issue started in December 2022 when the lenders started demanding immediate TLB payments. Byju’s offered a higher interest rate, in response, but was answered with a request for USD 200 million in prepayments.
In May 2023, Byju’s closed an INR 2,000 crores debt with Davidson Kempner. A month later in June, they defaulted on their payment and filed a lawsuit against their foreign lender, Redwood, in New York. They stated that Redwood purchased a significant amount of the loan while they continued to trade in distressed debt. This conflicted with the set loan contract’s terms and conditions.
The company responded to these moves as being predatory and that they were forced to make cuts in their home team. These predatory tactics included threats to seize the company’s assets and demands for early repayments.
Byju’s, however, remained optimistic and was open to discussions. They were willing to keep making payments if the lenders honoured their part of the deal.
Also back in May 2023, investment management company Blackrock valued Byju’s at USD 8.29 billion. This was a sharp decrease in valuation from USD 22 billion in 2022. It remains to see what the company’s valuation will stand at after all legal battles and debt has been repaid.