Salaries delayed for many employees

The financial pressures on Educomp Ltd, one of the most well-known names in the Indian digital education space, are catching up with its employees, many of whom have not received salaries for months.

Dismissing allegations that company is cash-strapped and as such is unable to pay its employees, a company spokesperson told Business Line that Educomp was trying to “rationalise” its operations to cut down on expenses and become more efficient.

The spokesperson said all dues of school coordinators who had been let go were in the process of being settled and the process was likely to be completed over the next one month.

The company is also looking at restructuring its huge gross debt of Rs 2,100 crore.

The company’s liquidity issues are affecting thousands of employees, many of whom have not received salaries for months together. However, Educomp blames the delays on schools which have not paid the company for their services.

“As part of our cost optimisation programme, employee strength is being rationalised and a large number of unproductive staff largely consisting of school coordinators have been let go over the past three months,” the spokesperson said.

A PTI report says Educomp has cut 3,500 jobs over the past three months.

Educomp has been working with Government as well as private schools to provide computer education. Schools using Smartclass are expected to pay for the hardware, content and services provided by Educomp’s resource coordinators or Smartclass coordinators.

Earlier, Educomp had said that in some instances, delayed payments to Educomp on the part of the schools using Smartclass could lead to delays in payment to their resource coordinators (provided by Educomp to schools to ensure effective usage of Smartclass).

“Educomp has meanwhile gone ahead with sending notices to schools who have long delayed payments for Smartclass services,” the company spokesperson said.

Salary woes

However, it is not just school resource coordinators who are at the receiving end of salary woes.

Many other employees, including some senior managers, are facing a tough time, too.

A mid-level employee who works at the company’s Delhi-NCR office said she, along with some colleagues, had not received salaries for June and July. What’s more, the company has not explained the reasons for the same to the employees, she said.

“I have been working with Educomp for the past five years. But for the last eight months or a year, there have been delays. Initially, salaries were delayed for about 15 days, but over time it progressed to two months,” she said.

Another former employee from Karnataka, who quit a year ago as a senior manager, said he was yet to receive his final settlement. He asserted that the salary problem was not restricted to just resource coordinators, though it may be a more frequent problem with them.

(This article was published on August 16, 2013)
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