Byju’s, India’s once biggest ed-tech company, is on the verge of collapse. The company is currently grappling with a severe liquidity crisis, prompting a series of organizational shake-ups in recent months. This unfolding crisis extends far beyond the boardrooms, reaching the Bengaluru offices, where employees now unexpectedly find themselves dealing with a stinking and unhygienic work environment.
Employees at Byju’s Bengaluru office are experiencing worsening working conditions, including a decline in workplace amenities and hygiene standards. One employee shared that, the toilets at Byju’s office deteriorated to a state worse than government bus stops during a period in November. Despite complaints leading to sporadic cleanings, the issue persists, with little effort made toward ongoing maintenance. The cleaning staff has also been downsized.
Furthermore, Byju’s has eliminated several employee benefits, including refreshments like coffee, tea, bread and jam, and soup, which were previously provided. Coffee machines and other amenities have been removed, leaving only water available for the staff. These changes have contributed to a challenging and demoralizing work environment for Byju’s employees.
Byju’s Alpha, the US financing entity of Byju’s, has come under the control of creditors due to the non-payment of a substantial $1.2 billion term loan. The urgency is amplified as Byju’s faces a tight deadline to repay this $1.2 billion term loan B within the next three months. Complicating matters further, the prospects of selling its two subsidiaries, Epic and Great Learning, remain uncertain.
Given the financial strain and the absence of viable options, Byju’s is left with little choice but to implement deep cost-cutting measures.
Drastic Cost-Cutting Measures
According to an internal document obtained by Moneycontrol, Byju’s significantly reduced expenses related to workplace services, including tuition centers, corporate offices, and sales offices. In December 2023, these costs dropped sharply to approximately Rs 25.73 crore, marking a 41% YoY decrease from Rs 44.03 crore in December 2022. Notably, this category was the biggest expense for Byju, accounting for 53% of the total operational costs.
As part of the cost-cutting measures, Byju’s vacated its largest office in Bengaluru, a 558,000-square-foot property in Kalyani Tech Park, in July 2023. Currently, the company maintains two corporate offices in Bengaluru— Prestige Tech Park and IBC Knowledge Park. At Prestige Tech Park, three out of seven lifts have been non-operational for over a month, with no apparent efforts made for repairs and maintenance.
Due to Byju’s financial strain, employees are facing a double whammy, experiencing both layoffs and delays in salary payments. The company has deferred all employee provident fund payments since November, following partial payments in previous months, as revealed by the latest data on the Employees’ Provident Fund Organisation website. The India entity of Byju’s currently has around 14,000 employees on its payroll.
In December 2023, CEO Byju Raveendran even pledged personal assets to ensure ongoing staff remuneration.
“We are majorly understaffed and overloaded with work. Everyone is trying to leave at the first chance they get,” a Byju’s employee said.
In a concerted effort to address financial constraints, Byju’s has reduced costs associated with technology and software. These expenses declined a significant 49% YoY, from Rs 28.75 crore in December 2022 to Rs 14.71 crore in December 2023. Notably, this category stands as the second-largest expense, contributing nearly 30% to the company’s overall operational costs.
Byju’s also slashed its IT infrastructure expenses by 64% YoY, to Rs 2.77 crore in December 2023 from Rs 7.66 crore in December 2022.
Additionally, expenses related to human resources, marketing, finance, and legal services, comprising approximately 10% of Byju’s operational costs, were reduced to Rs 4.72 crore in December 2023, demonstrating a notable 71% YoY decline from the Rs 16.42 crore recorded in December 2022.
Up until mid-2022, Byju’s had been availing services from outsourcing agencies, including Teleperformance, Cogent E Services, and iEnergizer, to source calling agents. In a cost-cutting move, the ed-tech firm discontinued services from Teleperformance and Cogent E Services. This move substantially reduced Byju’s business process outsourcing expenses, which plummeted to zero in December 2023, down from over Rs 4.49 crore recorded a year earlier.
Byju’s total monthly operational expenses, excluding salaries, declined 63% YoY to Rs 48.6 crore in December 2023 from Rs 130.69 crore in December 2022. This was also a notable 79% decline from the peak costs of Rs 234.7 crore recorded in August 2022.
Byju’s Valuation Plunge
Byju’s is currently facing a race against time, with challenges so substantial that its ability to sustain operations in the coming months is uncertain. The company is grappling with a significant gap between its assets and liabilities, primarily attributed to cash burn and obligations related to term loan B. This resource gap has become a pressing and immediate concern for Byju’s and its investors.
Moreover, Byju’s valuation has undergone a staggering decline, plummeting over 86% from $22 billion in July 2022 to less than $3 billion in November 2023.
Notably, the impact of Byjy’s financial challenges extends beyond the company’s bottom line, affecting the personal net worth of founder, Byju Raveendran.
Raveendran, once a billionaire who debuted on Forbes’ World Billionaires list in 2020 with a fortune of $1.8 billion, has seen the value of his 18% stake in Byjy’s diminish to an estimated $100 million, factoring in loans. This is a stark drop from $475 million in March 2023 and significantly below his peak net worth of $3.6 billion in July 2022.
The looming challenges faced by Byju’s, ranging from declining working conditions at its Bengaluru workplace, massive layoffs, pending salary issues, and overarching cash crunch, cast a shadow over its sustained viability in India’s rapidly changing startup ecosystem. As the edtech firm strives to make strategic decisions, the coming months will be critical in determining whether Byju’s can weather the storm and reclaim its position as a pioneering force in the ed-tech landscape. Let us know your thoughts on Byju’s ongoing situation in the comment section!
