SUMMARY
- AWS and Vodafone Idea have halted their services to BYJU’S due to outstanding payments.
- Sources suggest that with a backlog of vendor payments and no incoming revenue, BYJU’S is finding it challenging to make any payments.
- The edtech has been facing several legal battles in both India and the US by its largest creditors and investors.
Leading service providers like Amazon Web Services (AWS) and Vodafone Idea have halted their services to BYJU’S due to outstanding payments, as the struggling edtech firm faces numerous setbacks, including several legal disputes and liquidity issues.
BYJU’S has not paid for its AWS account for over two months and has not renewed its commercial calling services with Vodafone Idea in August. Amazon’s cloud computing platform, AWS, was providing cloud services for the edtech firm’s mobile application, while Vodafone Idea was the exclusive mobile network service provider for the company.
Since the beginning of this month, the primary contact number for BYJU’S Tuition Classes (BTC) and the main online platform of BYJU’s have been unreachable, as per YourStory. The BYJU’s mobile app has been experiencing frequent crashes, with reports suggesting that AWS has decided to discontinue support for the app.
Sources have stated that typically, when a company falls behind on payments, it is offered the chance to pay a small sum upfront to continue using the services. However, with a backlog of vendor payments and no incoming revenue, BYJU’S is finding it challenging to make any payments. The website is operational, but this is being used to create a narrative that the company is not shut down.
While the website is operational, server-related issues, which have been occurring this month, are becoming more frequent. These issues are usually resolved within an hour, but during these periods, access to classes is disrupted.
It’s common for technology companies to work with multiple cloud service providers as part of a multi-cloud strategy, but they often rely on one primary provider for most of their services. If the primary provider stops offering services, systems are designed to move to other providers.
However, this failover process can lead to technical issues or downtime, depending on the planning of the migration and how well the different cloud infrastructures work together. Sources indicate that BYJU’S has shifted its databases to Google Cloud.
The edtech has been facing several legal battles in both India and the US by its largest creditors and investors, and has been grappling with a financial crisis for over a year. As of August 19, 2024, BYJU’S owes approximately Rs 380 crore to operational vendors, according to data available on the Insolvency and Bankruptcy Board of India’s website.
The escalating troubles at the edtech have resulted in many employees leaving, while those remaining are actively seeking new employment opportunities since the company began to struggle with payroll.
The sources have stated that a small number of educators are offering online lessons on their own because they aren’t being paid by the edtech firm due to its financial difficulties.
“They (BYJU’S) have not paid salaries to teachers for months, so most teachers have stopped taking classes. There’s absolutely no revenue coming in,” said another anonymous source. “The only working IP is Aakash and Great Learning,” the person added.
In 2021, BYJU’S purchased Aakash Educational Services Limited (AESL) for around $950 million. The Delhi-based test prep company is now worth about $700 million, with Ranjan Pai, the Chairman of Manipal Education and Medical Group, owning the largest share, with 40% of the company. The same year, BYJU’S also bought the educational skills startup Great Learning for $600 million.
In 2023, BYJU’S was in talks about selling Great Learning to pay off debts related to a $1.2 billion term loan B it had taken from its US-based creditors.
