Softbank-backed Unacademy has reportedly sacked about 2.6% of its workforce, or around 150 employees, in what seems to be a cost-saving exercise. The company has, however, said employees were let go as an outcome of a performance appraisal round. After this, at least 750 of its people stand affected, including the 600 workers the company fired in April. Unacademy is the only edtech unicorn— after Vedantu—to have laid off its staff twice within the span of a few months.
A majority of the sacked employees were reportedly from PrepLadder—a company it acquired in 2020.
PrepLadder is an online portal for medical entrance exam preparation that provides course material and offers mock tests. A few from Unacademy’s sales team were affected, too.
Unacademy has, however, denied that this was a layoff.
“The company is built on a culture of high performance and transparency, and a key aspect of that is the transparency and objectivity of our performance appraisal process. Based on the outcome of the recent appraisal, a very small fraction of the workforce (~2.6%) was put on a performance improvement programme, as is common for any organisation of our size and scale. The departure of these employees is a result of the PIP, which is a standard practice in all organisations,” Unacademy said in a statement.
“The company has in good faith ensured they receive generous severance and support. We wish all of them the best of luck and thank them for all their efforts at Unacademy,” the statement added.
Companies generally place employees on a PIP to monitor their progress and if their performance isn’t satisfactory, they are let go.
In the recent past, multiple edtech peers like Vedantu, Invact Metaversity, FrontRow have sacked several employees to reduce their cash burn while Lido Learning and Udayy each fired all their 100-plus staff and shut shop because their entirely online teaching models didn’t yield desired results.
These purely online edtech companies operate in a hyper-competitive market and have seen their growth rate drop in recent times. The reopening of schools and colleges and a slowdown in funding from venture capital (VC) firms have both weighed on the industry’s performance.
Underscoring the slowdown, Unacademy’s co-founder and chief executive officer, Gaurav Munjal had earlier written in an email to his employees, “We are looking at a time where funding will dry up for at least 12-18 months. Some people are predicting that this might last 24 months.”
“We must survive the winter. We have a different iconic goal this time. The goal is of profitability. The goal is of generating FCF (free cash flow),” the mail added.
Further, to widen its revenue streams, Unacademy plans to open 15 offline centres across nine Indian cities in a span of about 30 days. It inaugurated its first such centre in Rajasthan’s Kota earlier in the week.
Unacademy— with a valuation of about $3.4 billion—is the country’s second most valued edtech firm, after Byju’s, which was last valued at around $22 billion. PhysicsWallah (PW) was the latest edtech unicorn, valued at $1.1 billion.