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From disgruntled parents to fraud allegations, troubles mount for edtech players

Many parents were lured by edtech players to make advance payments

INDIA-ECONOMY-EDUCATION-TECHNOLOGY-AMAZON Employees at work at one of Byju's offices in Bengaluru

A couple of days ago when Congress MP Karti P. Chidambaram said he had written to the Serious Fraud Investigation Office (SFIO) to investigate the finances of edtech major Byju's. There were also media reports stating that Byju's allegedly owed Rs 86.21 crore as dues to the Board of Control for Cricket in India (BCCI).

However when THE WEEK contacted Byju's, they denied any such media reports. “Extremely proud to be principal sponsor of Indian cricket team. No outstanding payment is due. We are extending the contract and payment terms for the same will be as per the new contract,” said Byju's spokesperson. There is still no official response from Byju's on the allegations leveled by Chidambaram.

Amid post-pandemic challenges for the edtech sector, there have also been cases where many parents have alleged that they are yet to receive their dues from edtech players despite canceling their subscriptions. The felt cheated. “Everything was going on well with my son's online classes and we had made advanced payment for the rest of the academic year. Suddenly the classes stopped all of a sudden as the edtech player decided to shut shop. Our money is still stuck and we are yet to receive the refund. Despite repeated reminders, there is no response,” said Ravi Sridharan (name changed) whose son is studying in class 9 in a public school in north Bengaluru.

Many parents were lured by edtech players to make advance payments for classes for the rest of the academic year. However, when the physical classes started the companies were adamant on changing the schedule. “My daughter was not able to attend the scheduled online classes by the edtech platform because there were physical classes in school. When asked for a change of schedule, the platform was not flexible and did not budge from the schedule. My daughter was not able to attend the rest of the classes and we ended up wasting money,” said a parent who did not wish to be named.

Experts with whom THE WEEK spoke to feel that when it rains, it pours and unfortunately what goes up too fast comes down faster. The question on everyone's mind was how can a startup splurge so much money when it comes to endorsements. “I agree that business to consumer (B2C) companies need to be on the face of a consumer, but do not agree in overdoing things. This was just too much and where is the return on investments for such spends. Parents from day one were never happy; there have been huge complaints about misselling which as a consumer we have experienced. At the end of the day, it comes to a basic question whether they are solving a genuine problem or are they just selling and pushing up the sales,” Sathya Pramod, CEO, Kayess Square Consulting Private Limited told THE WEEK.

Pramod said that he would not just blame the founders here but also the board who agree to such lofty ideas. “VCs are supposed to help companies be built the right way and not just help them in pushing valuations up. I still do not understand why startups need to spend so much money. Unfortunately this will not just impact Byju's but the entire sector. When the poster boy acts so irresponsibly, everyone starts wondering if everything is right. There is no smoke without fire. Their auditors would not have refused to sign the accounts of 2021 if everything was hunky dory. Unfortunately they are at the wrong side of everything. Their product is not great(parents are complaining), their marketing strategy (Indian team) is under fire, their finance seems to be in shambles (investors not investing), their accounts seem cooked up (auditors not signing). Being a poster boy comes with its own responsibilities and when that is not adhered to and understood well enough, it is the beginning of the end,” added Pramod.

A few experts believe that as a legislator, Chidambaram has rightfully urged the government to look into Byju's financial transactions which runs to the tune of crores of rupees. Numerous complaints have been made against the edtech giant which had tied up with various foreign companies and individuals.

“Any business endeavour's failure is a sad occurrence in terms of the economy and job creation. There should be no room for uncertainty regarding the honesty of educational providers in the context of education. As a startup, Byju's has turned into a poster child for dishonesty and failure. It is regrettable. Investigations into the company's financial transactions should be conducted by investigating agencies on their own initiative. All of the company's accounts must first be frozen before proceeding. The company should be under the scrutiny of investigative agencies until the investigation is over,” remarked Girish Linganna the Director of ADD Engineering Components India Limited.

He said that the case at Byju's also leads to a vital question – how come the company’s business was not scrutinised by any of the government agencies for years? Why the government wakes up only after public complain? Why regulatory mechanism is so poor? “Today it may be Byju's, tomorrow there could be other or many. We need strict regulations when it comes to healthcare and education provided by private companies and individuals,” added Linganna.

A few experts have also said that the allegations made by many parents against Byju's can be best treated as the deficiency of service and there are various sections under civil court that can be pursued. “The allegations made by Karti Chidambaram are themselves serious in nature and the competent authorities can take suo moto cognisance of these allegations. Particularly when Byju's is one of the top invested company and should there be any issues, its better to investigate them sooner rather than later,” pointed out Alok Shende of Mumbai based Ascentius Consulting.

Some experts, however, have a balanced view towards the whole edtech scenario in the country. “We must not worry about allegations in isolated cases. There is a huge need of bridging the skill gaps in India faster than ever before in order to fulfill our ambition of a 5 trillion dollars economy and keep growing. We all know that two things have to change in our education sector: the course content and teaching pedagogy. Technology has the power of revolutionising the education and training sector because of its power to create scale. Government and all others in the ecosystem must do what it takes to promote ideas in edtech that can enable millions of people in getting skilled to start contributing to the value creation processes as soon as they join an organisation; also to promote ideas that help millions in our workforce to up skill themselves and stay relevant for the ever-evolving business models in the world,” said Aditya Narayan Mishra, the director and CEO of CIEL HR Services. 

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