Allen Career Institute lays off staff amid declining student enrolments

The institute, which runs classroom coaching in more than 60 cities in India, has laid off more than 200 employees, and more are expected to be shown the door.

The drastic step comes within months of Allen restructuring teachers' compensation packages, resulting in a 20-40% drop in their fixed-pay components.

"The layoffs started a few months ago. In many cases, the senior faculty in charge of branches were informed that they had to either increase student intake or reduce teacher numbers," said one of the senior teachers who was also in charge of one of the branches. This teacher was asked to leave as well. "The teacher-student ratio in our classes was 1:25, and we were informed by the Kota centre that it had to become 1:60," the former Allen teacher added.

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Cost-optimization

Mint spoke to more than six Allen teachers and more from rival institutes who were aware of the retrenchments in both Kota and other centres. All of them spoke on the condition of anonymity. "In July, we were given targets but student enrolment numbers will not change immediately. I have let go of a few senior faculty members in the last six months," said the former Allen teacher cited earlier.

Allen did not respond to repeated queries from Mint.

One of the main reasons for the layoffs is the fall in students heading to centres like Kota that has prompted Allen to launch a cost-saving drive. According to faculty members across coaching centres of Kota, the reason for the decline in student enrolments is multi-pronged.

During the expansion phase, coaching centres had opened branches in various cities of Bihar, Rajasthan and other states, and parents now prefer sending their children to nearby centres, instead of Kota. According to its website, Allen has more than 60 centres in the country. Also, incidents of suicides in Kota by stressed students unable to cope with pressure and anxiety are another concern flagged by parents, said the faculty members that Mint spoke to.

The retrenchments are now taking place in phases and not on a mass scale. Mint has learnt that the faculty members are being offered a few months' notice.

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Top earners in trouble

Interestingly, it is the top-earning faculty members who are getting impacted. "It is not focused on JEE (Joint Entrance Examination, conducted for engineering colleges, including IITs) division, it is happening across divisions. JEE has the most highly-paid faculty and that is why this segment is highlighted, but layoffs are happening within NEET division too," said another source. JEE mains is the entrance examination that test lakhs of students every year for a seat in an engineering college. Those who qualify can also sit for JEE Advanced, subject to some eligibility criteria, that are meant for the country's 23 Indian Institutes of Technology (IITs).

Allen Career Institute competes with Vibrant Academy, Motion Education, Resonance Eduventures, Reliable Institute (now backed by Allen), BYJU's-owned Akash Institute, Career Point, Unacademy, Physics Wallah (PW) and Bansal Classes, among others.

Senior faculty members at rival institutes have confirmed to Mint about the exits from Allen and are worried that this might have a domino effect on the overall coaching industry too. "The layoffs are due to cost optimization and they (Allen) have a target to bring total staff (faculty and administrative) down from 12,500 to 10,000 by 31st December," said a senior executive at one of the prominent competitors. "Layoffs are also expected to happen in Jaipur, Chandigarh and Ahmedabad, apart from Kota," the executive added.

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A study in contrast

Earlier in July, Allen Career Institute slashed fixed salaries of its 4,000-plus faculty and administrative staff by 20-40%. Softbank-backed Unacademy soon followed, trimming teacher salaries by 20-25% across centres in Kota after it also faced a reduction in student enrolments.

Institutes in Kota began a fierce talent war after the pandemic ended by poaching faculty members and luring students from one another by offering higher salaries to teachers and offering reduced enrolment fees for students. The salary reductions, and retrenchments are a stark contrast to 2x-3x salary hikes offered in 2022.