(Yicai Global) Aug. 6 -- Amid market speculation that TikTok owner ByteDance is set to abandon its online education business, a source told Yicai Global that the company will not entirely leave the sector, but that there will be significant layoffs.

Industry insiders also told Yicai Global yesterday that ByteDance has made major job cuts in the education business, but not all employees in the area have been let go. Roughly 90 percent of employees to be laid off were working on education technology products including the Guagualong and Qingbei apps.

Beijing-based ByteDance has not yet made any comment.

The source said ByteDance will not shut down Qingbei and Guagualong, but will change direction to other innovative areas instead.

China’s online education sector has been in a tailspin since the government announced on July 24 a ban on off-campus tutoring in core curriculum subjects. The policy is believed to be aimed at reducing cost pressures facing new parents.

ByteDance has been ramping up its investment in education since the start of last year and reportedly regarded the sector as a major new growth driver following the success of TikTok. In March 2020, the company unveiled plans to hire more than 10,000 staff for its education business. In October, it launched an independent edtech brand, Dali Education, with Bytedance’s Senior Vice-president Chen Lin serving as chief executive.

Dali Education operates one-to-one English tutoring platform GoGoKid, online primary and secondary tutoring app Qingbei, and artificial intelligence-powered tutor Guagualong. Qingbei’s K12 tutoring and Guagualong’s AI animation courses for children aged three to eight will be affected by the new policy.

Since the release of the new regulations, there have been rumors about job cuts at online education firms including New Oriental Education & Technology Group, TAL Education Group, Gaotu Techedu, Zuoyebang, and Zhangmen.

Zhangmen’s founder Zhang Yi said the firm will have to bid farewell to some business partners under the new education guidelines. Gaotu’s founder Chen Xiangdong confirmed the layoffs in an internal company letter.

Editor: Tom Litting