SoftBank-backed edtech unicorn Unacademy has suspended contracts of some of its doubt-solving NEET and IIT-JEE educators, the latest in a series of measures to cut costs amid a funding slowdown.
"On Sunday (July 31) both sets of educators (IIT-JEE and NEET) got emails stating that their contracts were suspended for a minimum period of six months," a person familiar with the development told Moneycontrol.
"It means that their services are not required for six months starting August and they will not get paid during the period. Suspension of contract for six months is equivalent to that they are out of the system," the source added.
In the mail, Unacademy told the educators that it has made 'strategic changes' to its customised learning solutions and owing to the change it will 'significantly' reduce doubt solving on its platform.
"Thus, we have decided to temporarily suspend all deliverables related to doubt solutions as mentioned in your content provider agreement," Unacademy told educators in the mail.
Educators will receive their balance payments for their services till July 31 by August 31, the mail said. Moneycontrol has viewed a copy of the email.
A questionnaire sent to Unacademy remained unanswered.
Last month, Unacademy's co-founder and chief executive officer Gaurav Munjal had said in an internal mail to employees that the company would not exercise any more layoffs and instead shuffle teams to accommodate 'redundant' employees.
"We will continue to drive efficiency by reducing unnecessary expenses. We have some redundancies in some teams as well, so we will be moving team members from those teams to businesses that are blitzscaling like Unacademy Centers, core engineering, etc," Munjal had said.
In the same month, he had also said that Unacademy will be undertaking aggressive cost-cutting initiatives like pay cuts for top management and founders, and restrictions on travel. Munjal had added that it will also stop complimentary food services at its offices, as it seeks to chart a path to profitability.
So far in 2022, Unacademy has laid off 750 employees across its sales, marketing and other teams. It has also laid off hundreds of educators, who were hired on a contractual basis.
In May, Munjal had sent out another note warning employees of a potential 'funding winter' and had asked them to work under 'constraints.'
Slowing demand for online edtech solutions, coupled with a drop in funding, has forced edtech companies to lay off thousands of employees, go slow on expansion, reduce advertising and marketing spends. So far, edtech companies have laid off close to 6,000 employees since the start of 2022.
Unacademy, founded by Munjal, Roman Saini and Hemesh Singh, has raised $881 million in funding to date, with SoftBank, Sequoia Capital India and Nexus Venture Partners holding significant stakes in the firm. The company had reported a loss of Rs 1,537 crore for the year ended March 2021 on a revenue of Rs 464 crore.
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