Why are edtech firms like Unacademy and Vedantu firing employees?
What's the story
As India's edtech bubble continues to burst, firms that enjoyed unparalleled success in the last couple of years are now on the path of sustenance. Now, Vedantu, one of the leading edtech companies in the country has laid off 424 employees, two weeks after firing 200 academicians. Scarcity of funding and the drop-down in demand for online education is the main reason for this.
Context
Why does this story matter?
Last year, we saw massive consolidation of online education. Tablets and laptops replaced blackboards and books. Riding on the COVID wave, the Indian edtech industry saw exponential growth. As they say, all good things come to an end. Similarly, the edtech bubble has burst. People are losing their jobs and firms that once enjoyed a lot of funding are now cash-strapped.
Lay-offs
Vedantu, Unacademy, and Lido have fired several employees
As edtech firms try to navigate the winds of change, their employees are the ones who have to brace for the impact. Mass layoffs have become the norm. Last month, Unacademy laid off around 600 employees in its quest to become profitable. Another edtech startup, Lido had to shut down its business operations division and fired more than 200 employees.
Reason
Demand for online learning decreased after relaxation of COVID-19 restrictions
India's edtech market is facing a strong headwind. The lifting of COVID-19 restrictions has brought back schools and colleges, which has led to a dip in demand for online learning. Along with that, the scarcity of funding has edtech firms scratching their heads for long-term solutions. Geopolitical tensions, fear of recession, and rising interest rates have forced investors to withhold their money.
Competition
Most parents and students still prefer offline education
As the government relaxed the COVID-19 restrictions, we saw parents scrambling to get their kids to school buses. Now that the world is getting back to its previous normal, online edtech firms are facing a formidable rival in offline schools and tuition centers. As the demand for physical institutions increases, edtech firms like Byju's and Unacademy, with deeper pockets, have ventured into this field.
Future
Firms are looking into alternative revenue sources
What do you do when you are faced with adversity? Buckle down and ride it through. That's what these edtech firms are trying to do now. They are now looking for alternative revenue sources. Byju's has already forayed into offline learning with tuition centers and the acquisition of Aakash Educational Services Ltd. Unacademy has also announced its plan to set up physical learning centers.