Byju’s cutbacks: Employees struggle with deteriorating workplace amid massive cash crunch

Cutbacks at Byju's

Amid mounting troubles at Byju’s, employees of the edtech decacorn’s Bengaluru offices are grappling with deteriorating work conditions. With the once-feted startup fighting for survival, staff morale has taken a hit as cost cuts and operational issues weigh down the workplace.

“For a good period in November, the Prestige Tech Park office's toilets had started to look worse than government bus stops. After several complaints, the management got it cleaned. But the issue recurs and unless someone complains, there is no effort made towards maintaining cleanliness and hygiene. The number of cleaning staff has also been reduced,” an employee told Moneycontrol, requesting anonymity.

For the staff, the company earlier provided refreshments including beverages like coffee, tea, and other breakfast options like bread and jam, and soup, which have now disappeared, they added.

“They have removed everything, even the coffee machines. All that’s left now is water,” the person said.

Basic amenities

Byju’s is on the clock to pay off a $1.2 billion term loan B in the next three months. With no signs of its two subsidiaries on the block - Epic and Great Learning – getting sold and tight finances, deep cost cuts have become the only escape. Amid a massive cash crunch, it is now scrambling to provide basic amenities and standards of hygiene to the staff.

Key Takeaways

According to data from an internal document sourced by Moneycontrol, the company’s expenses on workplace services including its tuition centres, corporate and sales offices fell sharply to about Rs 25.73 crore in December 2023, down 41 percent from Rs 44.03 crore in December 2022. This was the biggest expense for Byju’s, making up 53 percent of operational costs.

A person close to Byju’s confirmed that with the strength of the company going down and cost cuts becoming a priority, facility management staff and other amenities have been reduced.

Moneycontrol reported in July the company vacated its largest office in Bengaluru – a 558,000 square foot property in Kalyani Tech Park. Byju’s now has two corporate offices in Bengaluru – Prestige Tech Park and IBC Knowledge Park.

“Out of the seven lifts at Prestige Tech Park, about three are non-operational for over a month, with no attempt made for repair and maintenance,” a second employee said.

Queries sent to Byju’s did not elicit a response at the time of publishing.

Trimming costs

Byju's slashed monthly operational expenses, excluding salaries to the workforce, to Rs 48.6 crore in December, marking a 63 percent decrease from Rs 130.69 crore a year earlier. As per the last accessible data of August 2022, its costs peaked at Rs 234.7 crore.

The cost cuts amid ongoing layoffs at Byju's have come as a double whammy for employees. Media reports suggested that the company is struggling to pay salaries, with founder and CEO Byju Raveendran pledging personal assets to ensure continued payments to staff.

“We are majorly understaffed and overloaded with work. Everyone is trying to leave at the first chance they get,” a third employee said.

The company has held off all employee provident fund payments since November, after making part payments in previous months, according to the latest data on the Employees' Provident Fund Organisation website. There are currently about 14,000 employees on the payroll of Byju's' India entity.

Meanwhile, expenses associated with technology and software decreased to Rs 14.71 crore from Rs 28.75 crore in December 2022. This cost head is second in line in terms of size, adding up to almost 30 percent of expenses for the company. Byju’s also slashed expenditure on IT infrastructure at its workplaces to Rs 2.77 crore from Rs 7.66 crore in December 2022.

Expenses incurred on human resources, marketing, finance and legal services, making up about 10 percent of Byju's operational costs, fell to Rs 4.72 crore – down from Rs 16.42 crore.

Byju's used to avail of services from outsourcing agencies including Teleperformance, Cogent E Services and iEnergizer till mid-2022. The three companies provided calling agents to Byju’s. The company has discontinued services from Teleperformance and Cogent E Services in an attempt to slash costs, sources told Moneycontrol. As a result, the company’s business process outsourcing expenses went down to zero in December from over Rs 4.49 crore a year earlier.

It is not known if the company continues to avail services from iEnergizer. One person said Byju’s continued its association with iEnergizer till November.

The company has stopped spending on field sales operations and below-the-line workforce and digital marketing services. It spent Rs 11.89 crore and Rs 10.31 crore, respectively, on these expenses in December 2022, according to the internal document.

Meanwhile, Byju’s cut expenditure on travel to Rs 66 lakh from Rs 55 crore a month, back in August 2022.

A breakdown of the cutbacks at Byju's

Troubles looming

Byju’s, India's most-valued startup, has been under fire since the start of 2022 for a range of issues including accounting irregularities, alleged mis-selling of courses, and mass layoffs. Since then, its investor board members have left too, citing differences with Raveendran.

Also Read: Byju's group general counsel Roshan Thomas resigns amid a series of top-level exits

The company has laid off thousands of employees in the past two years as it battled a double blow of drying venture capital funding and slowing demand for online learning services.

A senior executive from Byju’s’ new auditing firm MSKA and Associates said recently the company now faces an issue continuing as a going concern. A going concern is an accounting term for a company that has the resources to continue operating for the foreseeable future, in this case, the next 12 months.

The auditor added there is a “significant gap” between the assets and liabilities of the company. He said that due to the cash burn and the obligation concerning term loan B, the resource gap continues and has become a cause for concern.

The once-flourishing Byju’s now finds itself in a race against time. Its financial challenges and operational cutbacks paint a stark picture of the rocky road that Indian startups have traversed, especially over the past three years. The drastic cost-cutting has not only impacted the company's financial health but has trickled down to affect its workforce and operational standards.