Edtech firm Vedantu lays off 424 employees; CEO Vamsi Krishna cites 'scarce capital'

Edtech firm Vedantu is laying off 424 employees or about 7% of its workforce as the Tiger Global-backed company is expecting a scarcity of funds in the forthcoming quarters amid a slowdown in global financial markets. Vamsi Krishna, the CEO and the co-founder of Vedantu, on Wednesday, told employees in a blog that the company is looking to create a runway for at least 30 months without compromising on its core value of student centricity. 

Vedantu chief Vamsi Krishna wrote, "Currently, the external environment is tough. War in Europe, impending recession fears, and Fed rate interest hikes have led to inflationary pressures with massive correction in stocks globally and in India as well. Given this environment, capital will be scarce for upcoming quarters."

"With Covid tailwinds receding, schools and offline models opening up, the hyper-growth of 9X, Vedantu experienced during the last 2 years will also get moderated. For long term sustenance of the mission, V would need to adapt too," he added.

The CEO also said that the company is currently looking to create a runway for at least 30 months without compromising on its core value of student centricity and that it will focus on reduction in customer acquisition cost via innovation and automation around operations.

Krishna stated that Vedantu did a comprehensive review of all its projects, and mapped them into core and non-core projects to align all projects and teams to the core focus areas of Vedantu and rationalised the ones that were not in sync.

He explained, "The result is, that a few teams and projects will have to be deprioritized and in the process, a few of our Vedans will be let go as well. These calls are never easy to make and let me also tell you, this is not a reflection of either the ability or the performance of the impacted Vedans in any way."

For the employees who have been laid off, the company is extending the health benefits for them as well as their family till August 5, and access to 15 doctor consultations and discounted pathology and pharmacy services through Practo app until April 29, 2023. Furthermore, voluntary outplacement service support such as resume building, interviewing preparation support, training and opportunity identification will also be given to these employees. 

Krishna added, "At a personal level, I find it gut-wrenching to live through such a decision and to feel that somehow my decisions have led to such consequences. There is no way around this thought. The way I deal with it is to imagine this as a sacrifice for all of us so that Vedantu can continue on its journey of reaching millions more and making quality teaching reach them."

Earlier, edtech firms like Unacademy and Lido Learning and several others fired employees due to a slowdown in the education-technology sector in the country as many schools and physical tuition classes have reopened due to declining COVID-19 cases across the country.