Amid its decision to scale down small-ticket loans, fintech giant Paytm has sacked hundreds of employees citing the increasing usage of artificial intelligence-led automation.
Sources told Inc42 that the Vijay Shekhar Sharma-led company has been adopting AI wherever possible to drive up efficiency, which resulted in layoffs.
Besides, the company is in the midst of its appraisal cycle and the fired employees also include those who have not been meeting performance standards, the sources added.
While Inc42 couldn’t ascertain the number of employees impacted by the layoff exercise, a report by ET said 1,000 employees have lost their jobs.
The company, without disclosing the number of employees impacted, confirmed the layoffs in a statement.
“We are transforming our operations with AI-powered automation to drive efficiency, eliminating repetitive tasks and roles to drive efficiency across growth and costs, resulting in a slight reduction in our workforce in operations and marketing. We will be able to save 10-15% in employee costs as AI has delivered more than we expected it to. Additionally, we constantly evaluate cases of non-performance throughout the year,” the company told Inc42 in the statement.
It added that the core payments business may see an increase of 15,000 employees in the coming year.
“With a dominant position in the payments platform and a proven profitable business model, we will continue to innovate for India. In this, insurance and wealth will be a logical expansion of our platform, in continuation of our focus on the existing businesses,” the company said.
It is pertinent to mention that Sharma, last week, said that Paytm is aiming to generate an operating profit in under a year by bolstering its online wealth management services and onboarding more merchants on its network, coupled with cost savings from AI automation.
The development comes at a time when the fintech company has decided to scale down its small-ticket loans business of less than INR 50K, which predominantly comprises its postpaid loan business, following tightening of norms around unsecured lending by the Reserve Bank of India (RBI).
Postpaid loans below INR 50K loans comprised 72-75% of Paytm’s total disbursements in the BNPL category in the September quarter.
At a time when Paytm is seeing a rise in competition with the full-fledged fintech foray of Jio Financial Services and its arch rival PhonePe’s efforts to diversify its offerings, the decision to scale down the lending business is expected to challenge the company. Many of the brokerages have also slashed their estimates for the fintech giant.
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