Unacademy Layoffs: Is This the End of the Online Learning Boom?

Unacademy, a major edtech company in India, has let go of 250 employees this week, adding to previous rounds of cuts in 2022 and 2023. Is India's edtech bubble bursting? What are the reasons? Is Hybrid model answer to this crisis? Read to know.

New Update

TICE Creative Image

India's edtech scene, once hailed as a revolutionary force, is experiencing a dramatic shift. The giants that soared to unicorn status on the wings of online learning – the likes of Unacademy and Byju's – are now grappling with a harsh reality. Let's understand the reasons behind this reversal, explore the challenges these companies face, and unveil the path towards a new era for edtech in India.

The Online Learning Bubble Bursts

The pandemic-driven surge in online education inflated a bubble, propelling edtech startups to dizzying heights. However, as students return to the comfort of physical classrooms, the demand for purely online learning has waned. This shift has exposed the limitations of the online-only model in a market like India, where traditional classroom coaching remains deeply ingrained.

Unacademy: A House of Cards Tumbling Down

Unacademy, a household name in edtech, exemplifies the current turmoil. In a bid to streamline operations and achieve profitability, the company has resorted to a series of layoffs, impacting hundreds of employees. On Tuesday, the edtech laid off as many as 250 employees.

This cuts add to the string of layoffs in 2022 and 2023, painting a grim picture of the company's financial health. 

Unacademy CEO Comments on Startup Challenges Before Major Layoffs

On July 1, a day before Unacademy announced layoffs affecting 250 employees, founder and CEO Gaurav Munjal engaged with a post about startup failure on the social media platform X.

The post, shared by Zeta founder Bhavin Turakhia, highlighted the perils of "premature founder boredom" as a key factor in startup failures. Turakhia emphasized that the ultimate goal for any startup is to evolve into a "boring" business. He explained, “Until that happens, a founder cannot afford to get bored with his company.” Turakhia further outlined eight critical metrics for achieving this “boring” status, including sustainable profitability, growing market share, and structured processes across all functions.

“Founders fall in love with chaos, ambiguity, and uncertainty (because variable rewards release dopamine) and can begin to detach themselves from their core business prematurely,” Turakhia noted. This detachment, he warned, can lead to distractions, inefficient use of capital, and loss of focus.

Munjal responded to Turakhia’s post, commenting, “Hits the right chords.”

Unacademy had previously laid off 350 employees in March 2023 and around 1,000 employees in April 2022.

Addressing the recent layoffs, an Unacademy spokesperson stated, "As part of our ongoing efforts to streamline operations and enhance business efficiency, we have recently undergone a restructuring exercise. This was necessary keeping in mind the company's goals and vision for the year, as we focus all our efforts on sustainable growth and profitability.”

Unacademy's Pivot: Embracing the Hybrid Model

In an attempt to adapt to the changing landscape, Unacademy is transitioning from a purely online model to a hybrid approach. This strategic shift acknowledges the enduring appeal of traditional classroom learning and positions Unacademy for long-term success.

Byju's: A Parallel Story of Decline

Byju's, another edtech giant, hasn't been spared either. The company, which has witnessed the great fall from USD 22 billion valuation to Zero value, has seen a significant workforce reduction, with layoffs impacting sales, marketing, and even teaching staff. The once-lucrative salaries offered to teachers have plummeted, leaving many facing financial strain. Byju's, once known for its lavish compensation packages, is now struggling to pay salaries to its limited employees. The edtech is now focusing on bolstering its offline presence, mirroring Unacademy's strategic shift.

The Domino Effect: Industry-Wide Fallout

The edtech downturn extends far beyond Unacademy and Byju's. Several other startups like Lido, Udayy, and SuperLearn have been forced to shut down due to financial constraints. This wave of closures reflects a broader trend of declining investor interest and a clear shift in student preferences. Funding for edtech startups has witnessed a drastic decline, dropping from a high of $4.73 billion in 2021 to a mere $283 million in 2023.

Learning from the Ashes: Building a Sustainable Future

The current situation offers valuable lessons for the edtech industry. The over-reliance on online learning has proven unsustainable, highlighting the need for a balanced approach. Edtech startups must prioritize long-term viability by adopting hybrid models that cater to the diverse needs of students.

The inflated salary structures prevalent in the industry need correction. Implementing performance-based compensation models will ensure financial stability and attract talent focused on long-term growth.

The Dawn of a New Era: Embracing Hybrid Learning

The Indian edtech sector is undergoing a necessary transformation. Companies are moving away from unsustainable practices and embracing hybrid models that seamlessly blend the strengths of online and offline learning. This shift will pave the way for a more resilient and well-rounded edtech ecosystem.

While the past two years have been challenging for edtech in India, they have also presented an opportunity for growth. By prioritizing sustainability, correcting salary structures, and embracing hybrid models, edtech companies can emerge stronger and contribute to a future where education thrives in a balanced environment that leverages the power of both traditional and digital learning.

Join Our Thriving Entrepreneurial Community



Follow TICE News on Social Media and create a strong community of Talent, Ideas, Capital, and Entrepreneurship. YouTube  | Linkedin | X (Twitter) | Facebook | News Letters