Edtech firm upGrad is looking to hire more than 3,000 people across segments in 2022-2023 at a time when its peers are on a firing spree amid a 'funding winter' in the startup space.
“In this fiscal year, we will go up to 2,000-3,000 or more people. Every week I am sitting with an open position of about 250 plus… many of our new businesses, whether it is to study abroad, short skill certification, etc., will require the right sort of people coming in,” co-founder and managing director Mayank Kumar told CNBCTV18.com in an exclusive interview.
The unicorn has lined up the mega hiring plan ahead of a funding round it is expected to close soon. This is at a time when upGrad’s peers, not just in India, are struggling to keep up with the funding crunch. Without giving out names of investors participating in this round, Kumar said an announcement would be made.
The edtech sector witnessed a boom in 2020 and 2021 when the pandemic struck and online education became the go-to medium of learning. In 2021, edtechs reportedly raised over $4.5 billion. But as physical classes resumed funding dried up in 2022, with many resorting to mass layoffs. Reports state startups fired nearly 12,000 so far this year and 50,000 more could face the axe.
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“As the pandemic set in, there was a big jump (in online education) and because the money supply was there, funding was easily available. A lot of push happened on marketing and pushing the awareness of online education in the larger ecosystem,” he said.
But what went wrong?
With offline coming back up post-pandemic, schools, and tuition centres opened up, and Kota IIT-JEE and such coaching centres started to offer programs offline. So, there was a bit of an impact on demand for online courses, the upGrad co-founder explained. “But online demand is still higher than what it was pre-pandemic,” Kumar said.
He added that with offline back in the picture, the ecosystems largely getting impacted are K through 12 space and the tuition space. The impact is less on the adult learning and professional education or higher education space because these were never offline in nature. “But with funding coming down and offline opening up, you are seeing a bit of a churn happening in the ecosystem,” he said.
Kumar pointed to a shift in the way customers are being acquired. In the past two years, edtechs were acquiring customers at a much higher cost and today, with the funding ecosystem changing, companies and founders are taking a more rational call.
“We (edtechs) need to get the growth that is sustainable in the long term. So, between pandemic, funding, and the way in which the customers were acquired, we are seeing the shift happening,” he said.
What is upGrad doing differently that it is able to scale hiring?
Kumar said upGrad did not go berserk during the past two years and listed three things that it has done differently than some of its competitors.
"First, we are focused on a more diverse portfolio. Even if one sector is not doing that great, you have other sectors that will add up to your growth. Second, we have constantly focused on providing outcomes to our learners. So, our learners are finding jobs and they are seeing the result,” he said.
“And, the third, but a critical one, we are in the higher education and post-K through 12 space (unlike most peers), so the impact on our business from online to offline shift was limited. I think all three factors helped us build a more holistic and sustainable business," he said.
upGrad also never went beyond the means to acquire customers, so, every customer acquisition was profitable. "Therefore, as we add more and more customers, we tend to add to the bottom line itself," Kumar said.
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Is upGrad facing attrition?
While reports suggest upGrad started losing people when a six-day work week was imposed in October 2021 and staff was told to relocate to offices, Kumar said attrition is pretty much under control.
Earlier there were a lot of opportunities available for employees because edtech firms were paying higher salaries, but given there is a much saner approach to hiring, attrition is under control.
“Our attrition has reduced by 30 percent in June 2022 as compared to the last year,” Kumar told said but did not reveal absolute numbers. In the past six months, attrition halved, he said.
Commenting on the current recruitment, he said there is a little bit of replacement hiring but largely the company is looking to increase the headcount across all levels.
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“We are launching new products where we need to hire more people, both in sales and product. In certain places we are also trying to bring in more companies via mergers and acquisitions,” he said.
Kumar, however, said salaries are not increasing as much. “In certain domains, we do see that increase happening. Technology is a prime example,” he said. But in other functions, there is not a significant move because there is demand as well as a supply of bright talented folks in the market right now.
Edtech regulation check
The government recently issued a warning to edtech firms against unfair business practices. According to the upGrad co-founder, firms are engaging with the government and various policymakers on the three issues raised.
–Focus on misleading and ethical advertising: Many times while dealing with education, one needs to be very ethical in advertising and what message is being given out. “We are aware and we are making very clear guidelines around those.”
– Right sales/counselling approach: Many times what happens is, in education, sales get very aggressive. "So, the task is to bring the right model such that sales are not pushy but lead to the right counselling," he said.
–Financing and refund policies: “We have set up an independent entity under the Indian Ethic Consortium, where each of the members has signed up to the code of ethics that we are following. In some way we are self-regulating the industry,” he said.