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Byju's dismisses 500 employees via a phone call, letting go almost half of its Tuition Centre workforce
Merely days after not being able to meet payroll, Byju’s has abruptly laid off roughly 500 employees. The majority of these employees were part of its Tuition Centre department.
The difficulties faced by Byju's, the edtech firm, show no signs of abating. In the wake of the company's struggle to pay employee wages due to a lack of funds, new reports suggest that the firm has allegedly dismissed around 500 employees. These layoffs predominantly affect those in sales and marketing positions across various departments.
The Economic Times reported that the recent job cuts are happening because of difficulties in obtaining funding for daily operations, citing individuals who have knowledge of the situation.
Moreover, the firm is dismissing workers through phone calls and terminating them without any prior warning, as stated by Moneycontrol.com, citing insiders.
Roughly 240 of the dismissed staff members belonged to Byju's Tuition Centre functions, whereas the rest were working in its wider business sectors that concentrate on K-10 schooling and test preparation.
Insider information indicates that the layoffs were due to financial limitations, following an eight-week evaluation of less productive staff members. Contrary to typical procedures, the impacted workers were not offered a chance to improve their performance or given any prior warning.
A company representative also disclosed that they were nearing the completion of a business reorganization effort to streamline operational systems, cut down expenses, and enhance cash flow administration.
In September of the previous year, it was reported that the company based in Bengaluru planned to cut its workforce by around one-third, equating to roughly 4,000-4,500 staff members, as a part of their cost-reduction strategy.
The job cuts occurred only a day following a note that was distributed to workers on Monday. The note explained that their pay was delayed because of disagreements among investors. These disagreements have restricted the allocation of resources through a rights issue.
Staff members have been given internal guarantees that all outstanding wages, encompassing a large part of February's earnings and the complete March payment, will be settled by April 8.
The National Company Law Tribunal (NCLT) in Bengaluru has recently refused to stop Byju's special general meeting (EGM) set for March 29. The meeting aims to boost its approved share capital in order to make room for a $200-million rights issue.
The company is proposing a rights issue at a 99% discount from its highest valuation of $22 billion. Shareholders who don't partake in this funding round will see a reduction in their ownership percentage after the rights issue is carried out.
Byju's representative expressed confidence on Tuesday that the company would navigate through the "unfortunate" job cut scenario with the backing of most investors for the $200-million rights issue.
(Incorporating information from various sources)
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