Vijay Shekhar Sharma-led fintech giant Paytm, the subsidiary of One 97 Communications, has undertaken a significant reduction in its workforce.
Over 1,000 employees across various departments have reportedly been laid off, impacting around 10% of the company’s total workforce. According to an ET report, which first reported the development, the layoffs have occurred over the past few months, affecting areas such as payments, lending, operations, and sales.
The reason behind the layoffs
The report added that the decision for these layoffs is rooted in performance-related concerns and the company’s goal to improve profitability. The development aligns with a broader trend in the new economy sector, where companies are struggling to secure funding and are consequently cutting jobs.
The layoffs coincide with Paytm’s withdrawal from small-ticket consumer lending and “buy now pay later” segments, following regulatory restrictions by the Reserve Bank of India (RBI). Despite a 32% growth in consolidated revenue, Paytm recorded a net loss in the recent fiscal quarter.
The company had previously achieved operating profitability and is now aiming for EBITDA-level profitability.
Focusing on AI-powered automation
While Paytm confirmed the layoffs, The company didn’t reveal the number of employees impacted by this round of layoffs. To mitigate the impact of these layoffs, Paytm said it is incorporating AI-led automation, particularly in roles affected by the layoffs.
“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,” said a company spokesperson.
Future hiring plans
Despite the current job cuts, the company plans to hire approximately 15,000 employees in the coming year, focusing on strengthening its core payments business and expanding in wealth management and insurance distribution.
In the first nine months of 2023, the Indian startup sector experienced a significant wave of layoffs, with over 28,000 employees losing their jobs, according to a report by Longhouse Consulting.
The numbers mark a dramatic shift from the previous year’s aggressive hiring practices. While edtech, real money gaming, and B2B e-commerce startups faced the brunt of job cuts, sectors like fintech and deep tech were less affected.
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