Layoffs in 2023: Paytm's parent company, One97 Communication, hands over pink slip to over 1000 employees

Layoffs in 2023: Paytm's parent company, One 97 Communications, has reportedly laid off over 1,000 employees as part of a cost-cutting strategy, following a realignment of its businesses and recent declines in stock prices.
Layoffs in 2023: Paytm's parent company, One97 Communication, hands over pink slip to over 1000 employees
Anjali Raj / Jaano Junction

Paytm Layoffs: Joining the bandwagon of layoffs in 2023, Paytm's parent company, One 97 Communications, has made the decision to terminate more than 1,000 employees across various departments as part of a broader cost-cutting strategy, as reported by the Economic Times.

The development comes after Vijay Shekhar Sharma, CEO and founder of Paytm, while sharing his to-do list ahead of the New Year, called out for suggestions from users for the fintech app.

The CEO shared that they have changed the Paytm app’s Home Screen. Paytm Payments Bank and other group entities’ offerings are clearly separated now, giving the app a cleaner look.

The company, which introduced India to mobile payments, is building an India-scale AI system that will help various financial institutes in capturing possible risks and frauds, while also protecting them from new kinds of risks due to advancements in AI.In doing so, the company is also optimising its workforce as it eliminates repetitive tasks, and encourages its employees to adapt to AI.

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Layoffs in 2023: Paytm's parent company, One97 Communication, hands over pink slip to over 1000 employees

A Paytm Spokesperson said, "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," as quoted by ANI.

This series of job cuts has now positioned the Paytm layoffs as one of the most substantial workforce reductions within new-age tech firms in India.

The company spokesperson further added, "Our core business of payment may see manpower increase by 15,000 more 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, continuing our focus on the existing businesses. Having shown the strength of our distribution-based business model in loan distribution, we are expanding the same to focus on new businesses to drive scale."Paytm had reported operating profitability in early 2023, and is now gunning for EBITDA-level profitability. In Q2FY24, Paytm's revenue from operations saw a growth of 32% YoY to Rs2,519 Cr and its EBITDA before ESOP cost has improved to Rs153 Cr as compared to Rs84 Cr in Q1FY24 (excluding UPI incentives), ANI further added.

Earlier in 2023, over 15,000 employees were laid off across approximately 100 Indian startups, echoing the challenges of a prolonged funding winter, according to a Mint report. data revealed that Byju's, grappling with financial constraints, terminated 2,500 employees in its second round of layoffs this year. In a determined effort to meet payroll obligations, Byju's founder, Byju Raveendran, went to the extent of pledging his home to secure funds for employee salaries.

Followed Raveendran's exit from the list of the richest individuals, according to Hurun India Rich List 2023. The exit was cited to investor markdowns that Byju's incurred. Once afavourite of India's start-up ecosystem, and edtech evolution does not feature in the richest individual list for India anymore.

Sources cited by ET suggested that the majority of the job cuts at Paytm are likely to come from its lending business, which has experienced significant growth in the past year.

Paytm Postpaid, known for granting loans smaller than ₹50,000, is transitioning towards wealth management.

Despite Paytm's recent success, its stock experienced a notable decline of around 20 per cent on December 7. This decline followed the company's announcement of discontinuing the Paytm Postpaid loan plan.

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Layoffs in 2023: Paytm's parent company, One97 Communication, hands over pink slip to over 1000 employees

The trend of layoffs extends beyond Paytm, as newer tech startups have accounted for a substantial number of job cuts across India in 2023. Mohalla Tech Pvt Ltd, which runs the social media platform ShareChat and short video platform Moj, laid off around 20 per cent of its employees due to “external macro factors" impacting the cost and availability of capital, as reported by Mint earlier this year. Additionally, Dunzo announced that it would cut its workforce by 30%, resulting in almost 300 layoffs, earlier this year.

Source: mint

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