(Yicai Global) Aug. 2 -- Zhangmen Education and Gaotu Group are among a host of Chinese online education firms that have announced layoffs as the government clamps down on their main source of income, extra-curricular classes, to reduce the burden on the country’s school kids.

Shanghai-based Zhangmen Education dismissed 70 percent of the employees in its product development department on July 30, around 1,000 people, a staff member told Yicai Global.

Gaotu will shut down all of its 13 regional centers in the coming days, amounting to over 10,000 layoffs, a company insider told Yicai Global. Almost all the 3,000 staff members at its Jinan province arm have already left. They will be paid a month’s salary for each year they worked for the company, plus an additional month’s wage, as compensation, he added. Founder Chen Xiangdong confirmed the layoffs on July 30 in an internal circular but did not specify numbers.

Huohua Siwei, which has just filed for an initial public offering on the Nasdaq, has dismissed nearly half its staff, a source said. The online tutor, however, denies it.

E-educators are not allowed to offer courses to students from kindergarten to 12th grade after school hours, on public holidays, weekends and during the holidays, regulators said in a set of guidelines issued on July 24 with the aim of reducing the study workload during compulsory education years.

The entire industry is in disarray as a large number of their funding sources have also been cut off and their stock value has plunged. Many are rushing to open new businesses in other sectors to try to find other sources of income.

Meanwhile, teachers and support staff are fleeing the industry. Some will try to move into e-commerce or other tech sectors, retrain as civil servants or teach at regular schools. Others said they might try to offer their services as individual tutors, where they can earn between CNY400 (USD62) and CNY600 an hour, but they risk being reported and fined.

Editor: Kim Taylor