Explained: What Vedantu sacking employees again means for edtech startups in India

Why has Vedantu fired employees?

In a blog post, the startup’s co-founder Vamsi Krishna said that “currently, the external environment is tough”, on the cues of geopolitical tensions led by Russia’s invasion of Ukraine, “impending recession fears”, and a massive correction in stocks globally, including in India. “Given this environment, capital will be scarce for upcoming quarters,” Krishna said.

He also said that with COVID-19 restrictions being lifted across the country, allowing schools and offline models to open up, the growth the firm saw over the last two years of the pandemic would also get “moderated”. He termed the move as a means of “long-term sustenance”. Just eight months back, when the firm had achieved a unicorn valuation of $1 billion, it had also announced its plans to hire over 1,000 employees.

How are other edtech firms faring?

If 2021 was a year of massive consolidation in the edtech space with firms like Byju’s and Unacademy acquiring smaller online learning firms by the dozens, 2022 has been a more humbling year for Indian startups in this segment. Unacademy, which was last valued at $3.4 billion, recently laid off more than 600 employees and tutors to reduce its cash burn. Earlier this year, Lido Learning shut down its business operations, leaving tutors, parents, and students in the lurch and laying off more than 200 employees in the process.

The slowdown in funding has also forced edtech firms to look for alternate revenue models. On Wednesday, Unacademy announced its foray into the offline learning space by launching its own coaching centres, offering tuition for competitive examinations.