He is leading the payroll and non-payroll cost reduction, and bringing about a mindset change in the sales team by asking it to focus on selling the right product to customers, say sources 
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He is leading the payroll and non-payroll cost reduction, and bringing about a mindset change in the sales team by asking it to focus on selling the right product to customers, say sources On September 20, beleaguered edtech major Byju’s announced the appointment of Arjun Mohan as CEO of India operations, replacing its long-term steward, Mrinal Mohit. Both Mohan and Mohit are former students of Byju Raveendran, the Founder and Group CEO.
An alumnus of IIM Kozhikode, Mohan was part of the founding team of Byju’s and last served as its Chief Business Officer before joining upGrad as CEO in 2020. The appointment came after months of speculation regarding Mohit’s departure, coinciding with mounting governance issues, dwindling collections and a significant funding shortage faced by the company.
Mohan spent about three months working closely with Raveendran before deciding to formally join the company to lead this painful but much-needed restructuring.
“Arjun is very direct and a front-foot batter. He is one of those guys who would stand up to Byju (Raveendran); he knows how to manage him. He also has a knack for navigating the complexities of this business. Byju also knows him for a long time now, and is very comfortable working with him,” said a person with insider knowledge of the company’s transformation.
According to sources who spoke to Business Today, Raveendran has withdrawn from day-to-day operations to focus on big corporate-level matters, such as securing the much-needed new funding, settling the $1.2-billion term-loan, the asset sale processes to fund debt repayment, resolving the complexities of the Aakash deal, and addressing the overdue financial statement filings.
Mohan has taken charge of operations completely, beginning with efforts at bringing about a cultural change in the way the company was selling its product to parents.
“Historically, Byju’s sales teams worked under enormous pressure to sell products, it didn’t matter if parents could afford it or [if it was] the right product for the child. It [restructuring] requires a transition from being sales and marketing-focused company to one that is customer-centric,” said a person with inside knowledge of the company’s transformation. According to him, Mohan has instructed his sales team to make an effort to sit with each unhappy customer to solve their issues and sell products that best suit the customer’s needs, rather than what works better for the team’s short-term sales targets.
“Mohan has identified and bucketed key customer issues into 3-4 categories. He is currently working with his sales team to enforce a mindset change. The good part is that Byju’s has different kinds of products to offer different use cases and he has now given the sales teams the freedom to offer the right product to customers,” he said.
What’s even more critical, with immediate consequences, is the payroll and non-payroll cost reduction that Mohan is leading. Earlier, the core online business operated with separate business units and leaders for different functions including early learning, K10, 11 and 12th, home tuition and UPSC. Each BU created his own organisation for finance and HR functions. Meanwhile, the offline sales and marketing functions operated on a regional structure with each having its own support functions. The field sales teams were converted to inside sales earlier this year, when the company implemented a significant sales strategy shift to address complaints of mis-selling.
“It was a highly dysfunctional organisation...was a huge mess. A lot of leaders who understood that the company cannot be built like this, have left, but their teams were sitting there without much clarity on what to do,” a top executive said.
Mohan is currently in the process of merging these verticals into two lines of businesses—K12 and test prep. All sales and marketing functions are regionally allocated with one sales head responsible for all of these functions. Within the regions, the company is now setting clear demarcation between inside sales business and offline business—or Byju’s tuition centres (BTCs). Consequently, the company has shuttered approximately 20 offices, and consolidated the workforce into just five regional offices while centralising all finance functions under the CFO.
The consolidation has led to the elimination of numerous overlapping roles, resulting in approximately 3,500 more individuals departing the organisation. In May, the company had a total workforce of over 24,000 employees—from over 58,000 in March 2022—and the ongoing job cuts are expected to reduce the total count to nearly 20,000.
While the sales and other support functions of its 300-strong network of BTCs have been merged with the core business teams, these centres will continue to supplement the K12 and test prep units until the end of the current academic year before the company takes a call on which ones to retain.
“The offline centres have full-time teachers even though students come there only once or twice a week. These centres also incur a significant real estate cost. These are becoming like under-utilised stores, real white elephants,” another person associated with the business said.
Meanwhile, improving revenue collection is another key priority for Mohan. In its previous sales strategy, the sales force primarily concentrated on bookings as the company received upfront payments from its partner NBFCs that provided loans and EMI options to customers. However, early this year, NBFCs stopped offering loans in the wake of serious allegations of mis-selling and heightened scrutiny by government agencies regarding the legality of financial institutions entering corporate partnerships with edtech platforms for the purpose of facilitating such loans. Since then, the company has been directly offering instalment options to the customers. With the cessation of upfront cash payments, collections have seen a significant decline, posing substantial cash flow challenges for the company.
“The mechanism they [Byju’s] had in place was that they were only focusing on bookings, collection was coming through upfront payments. Now Mohan is reorienting the organisation to focus on collections,” said one of the aforementioned persons.
Additionally, the company has moved almost fully to digital short duration courses of 1-2 years which are priced much lower than tablet-based long duration courses (30-35k from 80k earlier / 3-5 years) in an effort to tempt more parents to make full payments. The shorter courses are playing a crucial role in ensuring more complete payments upfront, thereby facilitating faster and improved cash flows.
Meanwhile, Mohan is currently working with leaders to provide clarity on their responsibilities, KPI and accountability. As per one of the sources, Mohan will soon begin visiting different offices to meet with the team face-to-face and discuss the changes and improvements in the operations.
Mohan is also spearheading a host of non-payroll costs including cutting down cloud expenses, reducing SaaS licence costs, consolidation of offices spaces and revising travel policies.
While the workforce cost reductions may take about three months to start showing results, mainly due to laid off employees being placed on garden leaves, the company anticipates a substantial improvement in its cash situations from improved collections and cash flows which it hopes will help it achieve operational breakeven by the end of this financial year.
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