Educational Testing Services (ETS), the longtime administrator of the SAT, offered voluntary buyouts to every U.S. employee with more than two years of service on Tuesday morning. It’s the second major round of layoffs within the past year at the standardized testing pioneer, which has struggled to maintain its foothold in the shrinking assessment space.
In a video sent to employees and obtained by Inside Higher Ed, CEO Amit Sevak said that while the organization is “cash-flow positive for the first time in five years,” a number of revenue challenges have put it under financial strain.
“ETS is at an inflection point, one that requires critical decisions to ensure our sustainability,” he said.
The news comes less than a year after ETS laid off 6 percent of its global workforce—about 150 people—in September, the second such downsizing in Sevak’s two-year tenure. The company also downsized in 2021; in fact, this is ETS’s fifth round of layoffs in five years.
Sevak said that by offering voluntary severance agreements, ETS was “putting this decision in [employees’] hands.” He encouraged anyone “on the fence” about staying at ETS to take the buyout, adding that the package is “above market practice” and that officials “do not plan to offer something similar again.” He also said that the pace of change at the organization would be “intense,” and that those who stay would be expected to give “110 percent.”
“The purpose is to reduce our staff in the most gracious way we can,” Sevak said. “This is an opportunity.”
A longtime ETS employee who received the buyout offer told Inside Higher Ed that judging from messages sent by colleagues following the announcement, that’s not how staff see it.
“This is affecting people who raised their families alongside their work at ETS, people who have spent lifetimes working on a single product,” said the employee, who requested anonymity to avoid backlash from the company. “It’s been an hour since the news broke and folks are earnestly sharing self-harm and suicide-prevention hotlines.”
An ETS spokesperson confirmed the news in an email to Inside Higher Ed, and said the buyouts would allow them to “make necessary changes to our organization.”
“Today’s announcement is one of the many ways ETS will continue to adapt and build momentum so that we can best serve the learners and customers that rely on our solutions well into the future,” the spokesperson wrote.
Employees who received the offer have until July 11 to accept, and ETS will decide whether to approve those by July 25. The ETS spokesperson said there are over 2,000 U.S. employees but declined to answer questions from Inside Higher Ed about the number who received buyout offers or the company’s total expected layoffs.
“When this process of voluntary separation is over,” Sevak cautioned in the video, “it is likely that we may need to proceed with an involuntary layoff.”
‘A Perfect Storm’
ETS—the “largest private educational assessment organization in the world,” according to its website—owns and administers two of the largest exams in the U.S.: the Test of English as a Foreign Language (TOEFL), commonly taken by international students looking to study in the U.S., and the Graduate Record Examination (GRE), the standard post-baccalaureate exam.
But the organization has faced mounting market challenges for years, especially since the onset of the COVID-19 pandemic.
Those include the declining popularity of its marquee exam, the GRE, whose customer base had steadily declined due to the normalization of test-optional policies for grad programs, Sevak said. The GRE suffered a dramatic drop in test-takers after the pandemic, falling from 541,750 in 2017 to 341,574 in 2021; last May, ETS cut the time it took to complete the test in half in an effort to attract more customers.
Sevak also cited a “significant reduction in work from the College Board,” the nonprofit that owns the SAT, with whom ETS has had a decades-long partnership in administering the popular standardized exam. ETS’s previous contract with the College Board ended earlier this month, a College Board spokesperson told Inside Higher Ed in September, and Sevak said that though they signed a new agreement, it is less lucrative than the previous one.
“While the new contract maintains a relationship, it is a significant reduction in scope,” he said.
The testing industry is also going through a period of turmoil and change. The ACT, the organization that runs its namesake test, was purchased by venture capital firm Nexus Capital Management in April. ACT, which struggled during the pandemic, laid off over 100 employees ahead of the acquisition.
And in March, the College Board launched its new, digital-only SAT, a massive pivot for what remains the most popular standardized test in the country.
Sevak said that as the assessment landscape continues to change, “inefficiencies” in ETS’s structure and business model have prevented them from adapting.
“We see our competitors operating with a much lower and more flexible cost base, and with highly automated models,” he said in the video. “The way we’re structured is inhibiting us from swiftly pivoting to mitigate external threats such as AI, geopolitics, future customer needs, and the disruptive, competitive context.”
“If we do nothing, we will be left behind. In fact, we’ve been looking at backsliding into tens of millions of dollars in loss by 2025,” he continued. “It’s a perfect storm.”
