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Byju’s troubles don’t seem to be ending any time soon. Just days after the troubled tech company was facing issues paying salaries to its employees as it could not make payroll due to a shortage of funds, reports are now coming in that the company has reportedly laid off approximately 500 employees, primarily in sales and marketing roles across divisions.
Again, these layoffs come amid challenges in securing capital for its day-to-day operations, according to a report by the Economic Times, which quoted sources familiar with the matter.
Furthermore, Moneycontrol.com reported, quoting sources, that the company is laying off employees over the phone and letting them go without notice.
About 240 of the laid-off employees were part of Byju’s Tuition Centre operations, while the remaining were employed across its broader business divisions, which focus on K-10 education and examination preparation.
Sources revealed that layoffs stemmed from financial constraints and were conducted after identifying underperforming staff members over eight weeks. However, as opposed to the standard practice, the affected employees were neither put through a performance improvement plan nor given any notice.
A spokesperson for the company also revealed that they were in the final stages of a business restructuring exercise to simplify operating structures, reduce the cost base, and improve cash flow management.
Reports surfaced in September last year that the Bengaluru-based firm intended to reduce its headcount by a third, or approximately 4,000-4,500 employees, to streamline costs further.
The layoffs come just a day after a memo was sent to employees on Monday informing them of delayed salaries due to actions taken by conflicting investors, which have limited the use of funds through a rights issue.
Employees have been internally assured that all salary arrears, including a significant portion of February’s pay and the entire March payout, will be resolved by April 8.
Recently, the National Company Law Tribunal (NCLT) in Bengaluru declined to halt Byju’s extraordinary general meeting (EGM) scheduled for March 29 to increase its authorized share capital to accommodate a $200 million rights issue.
The rights issue is being offered at a 99 percent discount to the company’s peak valuation of $22 billion. Investors not participating in this funding will see their shareholding diluted after the rights issue is completed.
The statement provided by Byju’s spokesperson on Tuesday expressed optimism that the company would overcome the “unfortunate” layoff situation with majority investor support for the $200-million rights issue.
