PhysicsWallah says AI shrank its headcount for the first time and sets aside about $20 million for online acquisitions

PhysicsWallah, the Noida based edtech company listed on the NSE and BSE, has said for the first time that artificial intelligence is reducing how many people it needs. On its earnings call for the quarter ended September 30, held on November 4 and filed with the exchanges as a transcript on November 9, an analyst pointed out that the company's reported employee count of about 19,100 and faculty count of about 7,100 had fallen quarter on quarter, which had never happened before. Management agreed and put it down largely to AI efficiencies, Entrackr and the exchange filing show.

The company named the teams where the change is happening: content creation, quality checks, test paper making and the evaluation of students' written answers, which it said is now done through AI. Management also told analysts that AI now writes about 90 percent of its code. Employee costs excluding ESOP charges were 2.3 percent lower than a year earlier in the quarter and 2.4 percent lower for the half year, even as revenue grew, according to the transcript and Investing.com's copy of the call. In a separate interview with the Financial Express, chief financial officer Amit Sachdeva said AI writes 92 percent of the code and resolves 80 percent of support queries, and that he expects headcount to keep falling.

The savings are not all being banked. Technology spending for the first half rose to Rs 104 crore from Rs 70 crore a year earlier, which the company linked to AI work including its personalised AI tutor, called Tuto, now live at tuto.pw.live. Management said the tutor has logged more than 5,000 hours of learning, costs less than Rs 20 an hour to deliver, and will be priced at roughly double the average fee of its online batches once price discovery happens, though this year it will be mostly experimental.

On deals, the company said it is in advanced talks with a couple of fully online education businesses and is looking at others. It plans to spend around $20 million on these, in line with the Rs 300 crore of IPO money it had set aside for acquisitions not yet identified, and expects the deals to add to margins. Entrackr reported that acquisitions are expected to contribute less than 5 percent of the roughly 30 percent revenue growth the company has guided for FY27. Offline remains the weak spot: the segment posted a pre Ind AS EBITDA loss of Rs 108 crore in the first half, against Rs 120 crore a year earlier.

What to watch: the company has not said how many roles AI has replaced or whether any were layoffs rather than slower hiring, so the size of the shift is still unclear. The next marker is its investor day on November 18, where management said it would demonstrate the AI tutor.