Home/ Companies / News/  After hiving off CodeChef, Unacademy cuts 12% staff

MUMBAI : Unacademy, the Softbank-backed provider of test preparation services, cut its workforce by 12%, according to an internal memo from co-founder Gaurav Munjal, adding to the job cuts it did in the past year.

The latest layoffs, which follow two previous rounds in the past year, come a day after the company decided to hive off CodeChef, a competitive programming platform it acquired in 2020.

“This time, people from product and engineering, often the last to be affected, have been laid off," said a person with knowledge of the company’s plans. On Wednesday, the company said it would retain a 30% stake in CodeChef while returning the remaining equity to the company’s founding team to grow further. CodeChef will continue to work as an independent platform under the Unacademy Group.

In the internal mail, Munjal told employees that the management took every step in the right direction to make the core business profitable, yet it’s not enough. “We have to go further; we have to go deeper. Unfortunately, this has led me to take another difficult decision. We will be reducing the size of our team by 12% to ensure that we can meet the goals we are chasing in the current realities we face," the memo said. Mint has reviewed a copy of the letter.

Edtech companies have been under severe pressure as capital flows dried up and investors demanded they show a path to profitability. Unacademy has joined a list of edtech companies, including Vedantu, Byju’s and Upgrad that have been aggressively curtailing costs over the past year.

“Today’s reality is a contrast to two years ago, when we saw unprecedented growth because of the accelerated adoption of online learning. Today, the global economy is enduring a recession; funding is scarce and running a profitable business is key," Munjal said.

Unacademy has been battling higher burn rates and has been asked by its investors to reduce costs by more than 5%.

“I have conducted detailed reviews with every leader in the organization to determine the size of the team in line with a sustainable cost structure, the skills necessary for today’s business needs and the direction each team has to take to work towards our key business goals and achieve profitability," Munjal said in the mail.

Those affected will receive severance pay equivalent to the notice period and one month’s pay, accelerated vesting for employees who have been with the company for at least one year, medical insurance coverage for an additional six months until 30 September, and dedicated placement and career assistance.

The decline in online engagement has put a lot of pressure on Unacademy’s core business. The shift to offline is an expensive proposition and a plan that needs six sigma execution, an investment banker tracking the education segment said.

Unacademy has more than 2,200 crore in cash, enough to survive without raising funds for the next three years. “The key, however, is how you explore newer streams of growth and how you curtail your burn. Both of which are going to be very difficult for Unacademy," the banker added.

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Updated: 31 Mar 2023, 12:28 AM IST
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