Zomato to cut staff by 3% | The Financial Express

Zomato to cut staff by 3%

Around 16,000 people are estimated to have lost their jobs in 2022 across educational technology, retail, finance, sports, rentals, among others.

The revenue from operations increased a sharp 62% y-o-y to Rs 1,661.3 crore. Zomato's share price closed down 0.89% at Rs 67.15 on BSE on Friday.
The revenue from operations increased a sharp 62% y-o-y to Rs 1,661.3 crore. Zomato's share price closed down 0.89% at Rs 67.15 on BSE on Friday.

The layoff crisis at India’s startups seem to be deepening with food-delivery platform Zomato saying on Saturday that it will lay off under 3% of its workforce of around 3,800 people. “There has been a regular performance-based churn of under 3% of our workforce, there’s nothing more to it,” said a Zomato spokesperson.

The layoffs come soon after three top-level exits from the company in the past few weeks. Zomato’s co-founder Mohit Gupta quit the organisation Friday, following exits of initiatives head Rahul Ganjoo and former head of Intercity Legends service Siddharth Jhawar earlier this month.

In May 2020, the Gurugram-based company had let go of 520 employees, or 13% of its staff, due to a slowdown in business following the Covid-19 outbreak. The fresh layoffs come at a time when Zomato is aiming to turn profitable and reduce costs in a challenging macro environment. The company is understood to have laid off at least 100 employees already across functions of technology, catalogue, product and marketing. Supply chain staff has not been impacted.

Also Read: Co-founder Mohit Gupta 3rd top exec to exit Zomato in Nov

In August, Zomato had said it is expecting to break even on adjusted Ebitda levels by March 2023 or latest by September next year, after achieving break-even in the food delivery business and reporting adjusted Ebitda of Rs 2 crore in the segment in the quarter ended June 30. Zomato’s net loss for the July-September quarter narrowed to Rs 250.8 crore against Rs 434.9 crore in the corresponding quarter last year. The revenue from operations increased a sharp 62% y-o-y to Rs 1,661.3 crore. Zomato’s share price closed down 0.89% at Rs 67.15 on BSE on Friday.

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 16,000 people are estimated to have lost their jobs in 2022 across educational technology, retail, finance, sports, rentals, among others.

The edtech sector has seen the highest layoffs thus far, with some estimates suggesting about 6,000 people have lost jobs as companies see sharp decline in revenue and profitability. In the recent past, multiple edtech companies like Vedantu, Invact Metaversity and FrontRow have sacked several employees to reduce cash burn, while Lido Learning and Udayy each fired all their 100-plus staff and shut shop.

Edtech startup Byju’s had said it would “rationalise” and “optimise” its operations to turn profitable by March 2023 and plans to fire about 2,500 employees from the product, content, media and technology teams in a “phased manner”. The decision to reduce the cash burn comes after the startup reported a loss of over Rs 4,500 crore in financial year 2021 on the back of a revenue of Rs 2,280 crore, the highest in the space. Unacademy, India’s second-most valuable edtech firm, also reportedly sacked about 2.6% of its workforce, or around 150 employees, as part of its cost-saving exercise.

Earlier this month, Tiger Global-backed Plum Insurance, an insurtech firm that provides comprehensive health and wellness benefits to corporates, had said it will lay off 36 employees. Among other companies Udaan, Citymall, Meesho, Cars24, MFine, Mobile Premier League (MPL), FrontRow, Lido Learning, OkCredit, Trell, Furlenco, Udayy, have all announced several lay offs in the past few months.

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First published on: 20-11-2022 at 06:15 IST