Online learning platform Vedantu is laying off 424 of its staff, accounting for a shade over 7% of its 5,900 employees.

In a long blog post on the company’s website, its CEO Vamsi Krishna termed the decision as ‘heartbreaking’, and listed out a slew of reasons, ranging from the Russia-Ukraine war to the US Federal Reserve rate increase, why he’s letting go of his employees.

“Currently, the external environment is tough. War in Europe, impending recession fears, and Fed rate interest hikes have led to inflationary pressures with massive correction in stocks globally and in India as well,” Krishna said. “Given this environment, capital will be scarce for upcoming quarters.”

The covid-19 pandemic – and the resultant lockdowns - had lent a massive tailwind to online businesses, and e-learning was no exception. But with the viral infection, which first swept the world in the spring of 2020 and upended lives and livelihoods, under control, schools and coaching centres are gradually going back to the physical mode. This has meant that online education businesses are unlikely to see the scorching growth that they experienced during the pandemic.    

“With COVID tailwinds receding, schools and offline models opening up, the hyper-growth of 9X Vedantu experienced during the last 2 years will also get moderated. For long-term sustenance of the mission, V [we] would need to adapt too,” he added.

To be sure, it’s not just about capital getting scarce, as the days of easy money draw to a close amid quickening inflation. The EdTech space is marked by intense competition, dominated by larger and better-funded entities such as Byju’s, Unacademy, and UpGrad. As the pandemic-driven froth settles, and the market share gets divvied up between offline and online players, the EdTech sector could see consolidation, eventually becoming a two-three-horse race.