Zomato lays off 600 employees, says technology had created redundancies

Zomato maintains that it was forced to rationalise the staff strength.

The country’s oldest food aggregation and delivery platform Zomato has given pink slips to 601 employees, shedding its workforce by more than 10 per cent. The Deepinder Goyal-led company has said the move is meant to correct “redundancies”.

While this is not the first time that Zomato has carried out mass layoffs, this is being seen as the biggest so far. As many as 541 employees were laid off on Saturday, after 60 had to leave last month. Earlier, in 2015, some 300 employees were told to go. In a statement, Zomato has put the number of employees after the layoffs at around 5,000.

The company, which has been in the news recently for all the wrong reasons, maintains that it was forced to rationalise the staff strength as improvements in technology resulted in certain redundancies in customer, merchant and delivery partner support teams. Goyal and restaurant owners as well as industry bodies such as the National Restaurant Association of India (NRAI) have been at loggerheads over Gold, Zomato’s much criticised premium membership plan.

“Over the past few months, we have seen our technology products and platforms evolve and improve significantly. While the business has continued to grow consistently, this has led to an overall reduction in direct order-related support queries. We have dramatically improved the speed of service resolution, such that now only 7.5 per cent of our orders need support (down from 15 per cent in March),” said a company spokesperson in a statement.

“Unfortunately, the culmination of these factors has also led to certain redundancies across our customer, merchant and delivery partner support teams. Today, we let go of 541 people (10 per cent of Zomato’s strength) across these support teams,” the company spokesperson added. 

Calling it a painful decision, Zomato said it had extended a severance pay of two to four months, based on tenure. Family health insurance cover will remain till end of January 2020.

Zomato claimed it had hired 1,200 persons across functions (not inclusive of last-mile delivery fleet) and another 400 in off-rolls positions this year. “We are currently hiring in our technology, product and data sciences teams. Zomato continues to remain a net job creator in the ecosystem by creating tens of thousands of delivery partner jobs, as well as multiple times more indirectly through our partners across various verticals,” it said.

Among the earliest unicorns and now valued at $4 billion, Zomato has been fighting a battle for supremacy with its biggest rival Swiggy. Zomato has been on a lookout for funds to sustain this battle but has not been able to so far.

In a series of recent tweets, Goyal admitted the company had made mistakes with its premium membership plan. “Somewhere, we have made mistakes and things haven’t gone as planned. This is a wakeup call that we need to do, 100x more for our restaurant partners than we have done before,” Goyal tweeted, referring to an ongoing protest called #Logout, urging restaurant owners to fight the deal-based schemes offered by players such as Zomato, EazyDiner and dineout.

While the company has made changes to its product, many of the high-end premium restaurants are still staying away from Gold as they believe it is just a deep discounting tool.