The edtech firm Unacademy has announced a number of cost-cutting initiatives in an effort to become profitable in advance of a prospective public offering at some time over the next two years, including the cessation of its sponsorship of the Indian Premier League (IPL) starting next year.
The company has also told staff about further cost-cutting measures, including as salary reductions for founders and management, limitations on employee and teacher business travel, and a halt to free lunches and snacks at its headquarters.
The news comes amid a financing restriction for Indian startups that has prompted a number of well-known companies, like Unacademy, to lay off employees and shut down whole business divisions. According to reports, Unacademy terminated 700–1,000 employees and stopped down its K–12 (kindergarten–class 12) business sector.
In all, Indian businesses have fired more than 12,000 workers so far in 2022. Aside from Unacademy, edtech companies like Byju’s and Vedantu have been at the forefront of the firing frenzy.
Unacademy had announced in May this year a venture into the offline learning industry by creating its own coaching centres, offering tuition for competitive tests, as demand for online education decreased with the easing of Covid-19 limitations. According to reports, the business spent hundreds of crores on hiring staff for its initial location in Kota, the nation’s centre for private tutoring. Byju’s, its main opponent, had made a billion-dollar acquisition of Aakash Educational Services, which allowed it to join the offline coaching market.
The co-founder and CEO of Unacademy, Gaurav Munjal, responded to a Twitter user by saying, “The previous three years with IPL were great. Our brand reached a new height. I suggest that all future brands collaborate with the IPL. Our attention has shifted. Therefore, it was decided to skip the IPL in 2023.
Upper-level executives (CXOs) of the company and some other workers would no longer receive Business Class tickets for travel, according to Munjal’s internal memo to staff. In a copy of the message Munjal states that those who want an upgrade “may pay from their own money.”
He said, “We will be closing down certain companies that have failed to establish PMF (product market fit), like Global Test Prep,” adding that the company’s CXOs will also lose certain other perks, such as specialised drivers.
Munjal reassured workers that the cost-cutting measures do not indicate that the company is in dire straits financially because, as of Monday, it has more than Rs 2,800 crore in the bank. “However, the objective has shifted. Within the next two years, we must have an IPO (initial public offering). We also need to make our cash flow positive. To do that, we must make frugality a core value, according to Munjal. Regarding the internal memo, Unacademy declined to respond.
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