PhysicsWallah Links Falling Headcount to AI, Saying It Now Writes About 90% of the Edtech Major's Code

PhysicsWallah, the Indian test-preparation company that grew from a YouTube channel into a listed edtech major, has become one of the first large Indian companies to link a decline in its workforce directly to artificial intelligence.

The company's total employees fell sequentially to about 19,100 in the July-September quarter, the second quarter of the 2026-27 financial year, while faculty numbers declined to about 7,100, according to Entrackr, citing disclosures from the company's earnings call reported on November 9. Management attributed the decline to efficiencies from AI "across content creation, quality checks, test paper preparation and evaluation."

Management also said AI now writes about 90% of the company's code, according to Entrackr and StartupTalky.

Lower costs, higher profits

The shift is showing up in PhysicsWallah's costs. Employee expenses, excluding employee stock option costs, fell 2.3% year-on-year in the quarter and 2.4% in the first half, according to Entrackr. At the same time, technology spending rose to ₹104 crore in the first half from ₹70 crore a year earlier, reflecting investment in AI and digital infrastructure.

Consolidated revenue rose 18% to ₹1,242 crore in the second quarter, and net profit doubled to ₹142 crore from ₹70 crore a year earlier, according to Entrackr. StartupTalky reported profit of ₹143.6 crore.

The combination of rising revenue and falling headcount illustrates how AI could change the economics of knowledge-intensive businesses, where people account for a large share of costs.

Where AI is replacing work

Education companies produce enormous amounts of content: video lectures, notes, practice questions, mock tests and answer explanations. Much of this work, including drafting questions, checking answers and evaluating tests, can be done or assisted by AI tools, reducing the need for large teams of subject experts and content developers.

In software development, AI coding assistants can generate, review and test code, allowing smaller engineering teams to build and maintain products. PhysicsWallah's claim that AI writes 90% of its code puts it among the most aggressive adopters of AI coding tools in Indian industry.

The offline challenge

While its online business benefits from AI, PhysicsWallah's offline coaching centres remain a drag on profitability. Offline revenue rose 9% to ₹541 crore in the second quarter and 12% to ₹1,031 crore in the first half, according to Entrackr. But the offline business posted a pre-Ind AS EBITDA loss of ₹108 crore in the first half, narrowing slightly from ₹120 crore a year earlier.

The company operates 370 offline centres, including 167 Vidyapeeth centres, its flagship format for full-time coaching. Vidyapeeth accounted for about 66% of offline collections in the first half, and the standalone Vidyapeeth business is already profitable, according to Entrackr. PhysicsWallah plans to add 25 to 30 offline centres a year over the next two to three years.

Open Magazine has reported that rent is a significant cost challenge for the classroom business.

Acquisition plans

PhysicsWallah has set aside less than $20 million for acquisitions, in line with the ₹300 crore it earmarked from its IPO for unidentified acquisitions, according to Entrackr. StartupTalky reported that it is in advanced talks with a few online education companies.

The company maintained its guidance of about 30% revenue growth for the 2026-27 financial year, including potential contributions from acquisitions, which it expects to add less than 5% to growth.

From YouTube to the stock market

PhysicsWallah was founded by Alakh Pandey, a physics teacher who started teaching on YouTube in 2016, offering free and low-cost lessons for students preparing for India's highly competitive engineering and medical entrance exams, JEE and NEET. His approachable teaching style built a huge following, and the company expanded into paid online courses and then offline centres.

The company became a unicorn in 2022, at a time when many Indian edtech companies were struggling after the pandemic boom. It later listed on Indian stock exchanges, becoming one of the most prominent edtech companies to go public.

The AI and jobs debate

PhysicsWallah's disclosure adds to a growing debate about AI's impact on employment in India. India's IT services industry, which employs millions of people, has been grappling with how AI coding tools will affect demand for software engineers. Companies across sectors are experimenting with AI to automate tasks in customer service, content creation, data analysis and software development.

Some economists argue that AI will create new jobs and boost productivity, while others warn of significant job displacement, particularly for entry-level white-collar roles. India's large population of young graduates entering the workforce each year makes the question particularly important.

For teachers, the picture is complex. AI can help create and personalise learning materials, but students and parents still value human teachers, particularly for motivation, mentoring and explaining difficult concepts. PhysicsWallah's success was built on the popularity of its teachers, and the company's challenge will be to use AI to improve efficiency without diluting that human connection.

The edtech landscape

India's edtech sector has undergone a dramatic shakeout. Byju's, once the country's most valuable startup, collapsed under the weight of debt and legal problems, while Unacademy, Vedantu and others cut costs and staff after the pandemic boom faded. PhysicsWallah has emerged as one of the strongest survivors, with a profitable business built on affordable pricing and a hybrid online-offline model.

The company competes with other test-preparation providers, including Allen Career Institute, Aakash, Motion Education and many local coaching centres, as well as online platforms.

Implications for students

AI could also benefit students. AI-powered tutors can answer questions at any time, personalise practice and provide instant feedback, potentially making high-quality test preparation more affordable and accessible. PhysicsWallah has been developing AI tutoring tools, and its scale gives it access to vast data on how students learn.

Expansion into new regions

PhysicsWallah has been expanding its reach beyond the Hindi-speaking heartland where it built its initial following. The company has said it is looking at South India for its next growth phase, according to Storyboard18, and has been developing courses in multiple Indian languages. Teaching in regional languages could help it reach millions of students who are more comfortable learning in their mother tongue, a large and underserved market.

What comes next

Investors will watch whether PhysicsWallah can sustain revenue growth while continuing to reduce costs through AI, and whether its offline business can move towards profitability. The company's experience will be closely watched by other Indian companies considering how far and how fast to adopt AI, and by policymakers concerned about the impact on jobs.