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Business News/ Companies / Start-ups/  Swiggy lays off over 6% staff to tame costs

NEW DELHI : Food and grocery delivery aggregator Swiggy has laid off 380 employees or nearly 6% of its 6,000-strong staff, becoming the latest to join the flurry of layoffs in India’s startup ecosystem.

Tech firms across the board have ramped up their cost-cutting measures with layoffs being the primary one. Already this year, by its third week, over 1,500 employees have been fired by Indian startups, while the number was higher for US-based tech giants including Microsoft which laid off about 10,000 employees earlier this week.

The delivery platform’s co-founder and chief executive, Sriharsha Majety cited macroeconomic headwinds and a shrinking growth of food delivery businesses as the reason behind the layoffs.

“We’re implementing a very difficult decision to reduce the size of our team as a part of a restructuring exercise. In this process, we will be bidding goodbye to 380 staff,“ Majety said in an internal e-mail to employees.

“While our cash reserves allow us to be fundamentally well positioned to weather harsh circumstances, we cannot make this a crutch and must continue identifying efficiencies to secure our long-term," he said, adding, “our over-hiring is a case of poor judgment, and the company’s management should’ve done better."

All of its 6,000 employees are full-time ones, listed on Swiggy’s payrolls. The laid off employees do not include any contractual workers such as its delivery partners.

Swiggy is also looking to shut down some verticals as a cost-reduction measure, Majety said: “Effective very soon, we will be shutting down our meat marketplace."

“While the team has done exceptionally well with solid inputs, we haven’t hit product market fit here despite our iterations. From a customer perspective, we will continue to offer meat delivery through Instamart," he said.

Even as the platform did not specify which division will be impacted, its marketing, human resources, technology and operations teams are most likely to be affected, including some senior-level employees as well, said a person privy to the matter.

Last month, Swiggy also shut down the operations of one of its cloud kitchens, The Bowl Company, in Delhi NCR, shortly after launching it as an experimental project in the area.

The food delivery platform will offer the laid off employees a minimum payout of 3 months or a notice period which can be extended by 15 days or more, based on their tenure in the company. The impacted employees will be eligible for the employee-stock-options (ESOPs)liquidity program scheduled for July this year, the e-mail said.

The Bengaluru-based food delivery platform’s rising costs also dented its earnings in financial year (FY) 2022 after Bundl Technologies Pvt Ltd, which operates the foodtech platform, reported a consolidated loss of 3,628.9 crore, more than double of its 1,616.9 crore loss in the preceding financial year.

The loss came on the back of Swiggy’s expenses which ballooned about 2.3x to about 9,600 crore, compared to 4,139.4 crore in FY21. Its revenue from operations, however, also doubled during the year to 5704.9 crore from 2546.9 crore in the year before.

SoftBank-backed Swiggy, last valued at $10.7 billion, provides a marketplace for food orders and delivery through its technology platform.

The company had last raised $700 million in a funding round led by Invesco in January 2022. It is backed by investors including Alpha Wave Global, Qatar Investment Authority, and ARK Impact, among others.

In other developments around layoffs, a bunch of Indian startups have sacked staff in the recent past, citing macroeconomic headwinds, a looming recession in the US leading to a tech rout and economic hurdles due to geopolitical tensions in Europe.

Lightspeed-backed Hubilo Technologies Inc, Exotel, ShareChat parent Mohalla Tech Pvt Ltd, quick commerce platform Dunzo, Lead School, UpGrad-owned Harappa Education, cloud kitchen startup Rebel Foods, mobility startup Ola, e-2wheeler maker Bounce, voice automation startup, industrial goods marketplace Moglix, and UpScalio, a Thrasio-style venture, were the latest to lay off their employees this year.

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Updated: 20 Jan 2023, 10:52 PM IST
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