Food and grocery delivery platform Swiggy will slash around 8-10% of its 6,000-strong workforce to rationalise costs amidst a funding slowdown, said two people aware of the development. The layoffs also come at a time when the company is aiming to turn operationally profitable before its upcoming IPO, sources said.
The layoffs will majorly impact employees in product, engineering and operations, the sources added. The foodtech unicorn recently concluded its performance review in October, and several employees were also put under a performance improvement plan (PIP), said the first source mentioned above.
The first source also added that the management had delayed filing Swiggy’s preliminary papers for a public listing with the Sebi due to the poor performance of tech stocks in India and abroad.
“The management has decided to take a wait-and-watch mode, and has now pushed the draft filing for its IPO to December 2023,” the first source said.
“The work pressure has increased sharply over the past six months or so and the company has been shuffling teams for a while now…Employees are now just being asked to chase numbers and hit positive unit economics before the (public) listing,” said the second source mentioned above.
The second source also said that Swiggy has a numbered rating system for all employees on a scale of 0-5. “Employees with a rating of 2 and below have received intimation about PIP and they will be the most impacted,” the second source added.
Swiggy did not respond to an email seeking comments at the time of going to press.
Amid a funding winter, with venture capitals tightening purse strings, and increasing fears of recession and uncertain global economic environment, Indian startups have not had a good run this year. New-age companies across sectors have been cutting head counts in large numbers to prune costs. Around 17,000 people are estimated to have lost their jobs in 2022 across educational technology, retail, finance, sports, rentals, among others.
Layoffs at Swiggy come just months after its rival Zomato also fired around 3% of its 3,800 workforce in November 2022. A few weeks before the layoffs, Zomato reportedly saw three top-level exits, including co-founder Mohit Gupta, initiatives head Rahul Ganjoo and former head of Intercity Legends service Siddharth Jhawar.
Swiggy has also emerged as a tough competition to Zomato as a private company, especially after its $120-million acquisition of restaurant discovery and reservation platform Dineout in May 2022.
Until this acquisition, both Swiggy and Zomato competed only on two turfs — food and grocery delivery. With Dineout, it directly stepped into Zomato’s restaurant discovery market, which also has a few other competitors such as Nearbuy and Eazydiner.
In the grocery delivery vertical, Swiggy’s Instamart service had exclusively secured large funding worth $700 million led by investment firm Invesco in January 2022. Following this funding, Zomato also acquired grocery delivery app Blinkit for $570 million, although rumours of the deal had been drifting around since early 2022.
In a recent financial report by Prosus, which is Swiggy’s key investor, the foodtech unicorn was estimated to have hit a gross merchandise value (GMV) of $1.3 billion in its core food delivery business during the first six months of FY23. This was a 40% jump compared to the same period in FY22. During the same period, Instamart also saw its GMV reach $257 million, according to Prosus’ estimates.
However, on an annualised basis, Instamart’s GMV (annualised) stood around $350-400 million, as per analyst estimates. That compares with Blinkit’s roughly $400-450 million. Swiggy has nearly 200,000 restaurant partners and over 300,000 delivery executives, said Prosus, which owns a 33% stake in the food tech firm. So far, Swiggy has raised over $3.5 billion worth of capital and is valued at $10 billion — a decacorn.
In FY22, Swiggy saw its losses more than double to Rs 3,628.90 crore in FY22 from Rs 1,617 crore a year ago. Analysts said the losses were the result of the company’s efforts to grow its gross revenue, which rose 124% to Rs 5,705 crore in FY22 from Rs 2,547 crore in FY21.