Unacademy Suspends Educators’ Contracts to cut costs


The edtech company Unacademy has now stopped the contracts of its NEET and JEE doubt-solving educators for six months as part of its cost-cutting strategy, following allegations that it would fire over 1K+ staff in 2022. 

Unacademy terminated the contracts on July 31 without providing any advance notice, according to an email retrieved by Moneycontrol. An unknown number of contractors will be impacted by the change. 

Both sets of educators (IIT-JEE and NEET) received emails on Sunday, July 31, informing them that their services would be terminated for a minimum of six months. During this time, Unacademy will neither use their services nor pay these educators. 

According to the report, a six-month penalty is the same as being dropped from the Unacademy programme. Unacademy is a dream for these instructors. Unacademy informed these instructors that it will be implementing some strategic measures that would reduce the necessity for a platform for doubt solving. 

“Thus, we have decided to temporarily suspend all deliverables related to doubt solutions as mentioned in your content provider agreement,” the email reads.

The action was taken not long after Gaurav Munjal, the founder of Unacademy, made the company’s survival guide public. While the company had $350 Mn or more in the bank, Munjal had informed the Unacademy staff that the funds had been handled inefficiently. Despite the alarming nature of these measures, he emphasised that the company was in fine condition. 

Exiting the K-12 market and putting an end to its US operations within a few months is just a couple of the measures it has taken recently to manage its finances. Several perks and employee privileges were also taken and eliminated by the Unacademy leadership. To save money throughout its operations, the business has also stopped all sponsorship engagements. 

Unacademy reconsidered the requirement for service providers after joining the offline coaching culture as well. In addition to the latest canning, Unacademy had fired 125+ consultants from the PrepLadder team of the edtech unicorn, as well as 

200+ YouTube educators, citing performance concerns. 

While firing contractors, Unacademy recently hired 40 teachers from Allen for its offline centres in Kota and other locations. These teachers’ annual salaries will range from INR 1 Cr to INR 10 Cr.

In FY21, its expenses had increased dramatically to INR 2,029.9 Cr, and its employee benefit expenses had increased by over 6X to INR 748.4 Cr. 196.3 Cr of the costs for employee benefits were made up of salaries and wages. 

Customer acquisition cost for the company was INR 5.1 in FY21, and net loss increased 5X to INR 1,537.4 Cr. 

Moreover, the edtech unicorn has yet to submit its FY22 financials amid all this ruckus.

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