Chegg Layoffs

Chegg Layoffs 2024 -Is Chegg still in business?

Chegg, Inc. is a provider of online homework help. In June 2023, the company said it would lay off around four per cent of its employees. The reason behind this is that students are increasingly relying on artificial intelligence chatbots like ChatGPT for help. Is that ChatGPT is reason of chegg layoffs.

According to a regulatory filing, the business stated the cuts would impact 80 workers worldwide. “It will better position the company to move forward against the AI strategy,” it said.

So far, most AI-related job cutbacks have occurred in the IT sector. Chegg reduced workers after AI products instantly undercut their businesses. Thus, ChatGPT is a big challenge to Chegg’s business strategy. This article lets us learn more about the layoffs at Chegg,  a US-based online learning platform.

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AI creates employment losses

Some senior executives have warned that AI could replace some jobs in the tech business. Elon Musk went so far as to state, “There will ultimately be a point where no job is needed.” Yet, for companies currently introducing AI to their employees, their outlook can be more positive.

In this situation, Chegg’s stock fell after it became one of the first to admit that AI impacted its business strategy. Chegg noticed that students were turning to OpenAI’s ChatGPT for help. Chegg’s financial status suffered from the AI alternative, as its stock dropped roughly 50% on May 2, 2023.

The educational firm showed how fast AI can replicate services and goods. Thus, California-based Chegg’s revenue and subscriber base decreased. In reaction to the new reality, the company launched CheggMate, a service developed using ChatGPT-4. It provides personalized content with AI.

Chegg Layoffs

Chegg disclosed plans to reduce approximately 4% of its workforce. This news came weeks after its CEO stated that OpenAI’s ChatGPT was destroying its business. As said earlier, the students are beginning to use artificial intelligence for homework help.

According to the sources, the company plans to remove approximately 80 people. This is to execute its AI strategy better and produce long-term value for students and investors.

In line with these actions, the business expects to pay charges of about $5 million to the tune of $6 million. These charges mainly consist of cash expenditures for severance payments, employee benefits, and related costs. This is according to a regulatory filing.

A rising number of supporters have raised the alarm about the popularity of OpenAI’s chatbot. They claim that it has the potential to promote the following:

  • student cheating on school assignments,
  • create significant losses in employment,
  • share internet misinformation and 
  • lead to humanity’s death.

ChatGPT offers an essential risk to Chegg’s business model. According to the report, the business is built on subscription-based homework help, textbook rentals, test prep, and other student educational services.

Chegg’s content can be accessed for free with just a few keystrokes using OpenAI’s chatbot. Chegg confirmed in May 2023 that the AI chatbot ChatGPT impacted its profits. Thus, it is causing an uproar in the worldwide edtech industry. The Financial Times says at that time that,

  • The stock of language-learning site Duolingo fell by 10%.
  • US-listed education business Udemy dropped by more than 5%.
  • Chegg’s shares fell by half.

Also, Pearson, a company listed in London, saw a stock decline of almost 15%.

Chegg CEO Dan Rosensweig stated, “We are convinced it’s (AI) affecting our new customer growth rate.” To help retain students, the business has introduced its own AI chatbot, CheggMate, and OpenAI.

CEO Dan Rosensweig wrote a letter to staff members stating,

“We must transform our business to fully accept and utilize the advances we are witnessing in AI. This will create long-term benefits for our students. Thus, it will ensure Chegg is still a leader in driving needed change in the higher education system.”

“In less than 90 days, we have restructured our entire company. This is done to rethink how we can serve the students even better. Thus, by the end of the year, we will have hundreds of people engaged directly on CheggMate. We expect that to grow,” he added.


Rosensweig stated then, “We saw little to no effect from ChatGPT on our new account growth in the first part of the year. We met our expectations for new sign-ups.” “But starting in March 2023, we have noticed a large increase in student interest in ChatGPT. We now believe it is affecting our new customer growth,” he added.

“A quarter of jobs will be affected during the next five years.” This is according to a World Economic Forum forecast for 2023. The rapidly growing trends of AI, digitization, renewable energy, and supply chain reshoring will cause a significant change in the global labour market.

In addition, there is a “new era of turbulence” since many workers will not have the skills to keep up with the changes. Individuals with a technology, data analytics, or cybersecurity background will enjoy the changing environment.

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