Fintech giant Paytm set to go slow on hiring replacements for exiting staff

Paytm's non-sales employee cost dropped 35.6 per cent in Q4FY25 as the company opted not to backfill roles, leaning on AI to enhance productivity and trim expenses

Fintech major Paytm is going slow on hiring, and may not fill positions left vacant by employees as part of the push to cut costs and boost productivity using Artificial Intelligence (AI).

 

“I want to tell you that more automation is coming in. More productivity per employee is showing up. We are clear that we will not be recruiting incrementally if somebody goes out,” Vijay Shekhar Sharma, managing director (MD) and chief executive officer (CEO), Paytm, told analysts on Tuesday. He was responding to an analyst's question on how AI is impacting non-sales employee costs.

 

Non-sales employees will include roles from departments such as product, and tech--roles it believes can be supported by AI.  

 

Paytm is tightening control over indirect expenses. Non-sales employee costs were down 35.6 per cent to ₹336 crore in Q4FY25 from ₹522 crore in the year-ago period. Sequentially, it was down 3.4 per cent from ₹348 crore in Q3FY25. 

 

These expenses have been declining for the past five quarters. 

 

Sharma did not elucidate on the exact share of cost savings attributable to AI alone. He added that there won’t be a sharp fall in these costs moving forward. However, they would continue to decline in succeeding quarters. 

 

“We are doing a good job of using AI’s current capabilities. Of course, we can always do more, and AI continues to get better. Whatever opportunities exist today to become smarter, more efficient, leaner, those opportunities will be even more six months (or) a year from now,” said Madhur Deora, president and group chief financial officer (CFO), of the company. 

 

The reduction comes on the back of the company’s previous guidance on people cost savings. For FY25, the fintech firm was expecting annualised people cost savings of ₹400-500 crore.  

 

Paytm's cost saving strategy follows the Reserve Bank of India’s (RBI) business restrictions on the company’s associate entity Paytm Payments Bank last year. 

 

Expenses attributable to sales employees marginally declined to 5.4 per cent to ₹243 crore in Q4FY25 from ₹257 crore in Q4FY24. Sequentially, these costs were up 7 per cent as the company is expanding its distribution network. 

 

Broadly, Paytm’s indirect expenses were down 16 per cent to ₹991 crore in Q4FY25 from ₹1,185 crore last year. These contained line items such as marketing, software and cloud expenses, and other indirect expenses. 

 

One97 Communications Ltd (OCL), the company that operates the Paytm brand, posted a consolidated loss of ₹539.8 crore in Q4FY25, lower than the ₹549.6 crore it reported in Q4FY24.

 

Sequentially, the company’s loss widened to ₹522 crore in the quarter from ₹208.3 crore in Q3FY25, mainly due to a one-time exceptional expense amounting. 

 

This was largely driven by Vijay Shekhar Sharma forgoing employee stock ownership plan (Esops), leading to an expense of ₹492.4 crore. OCL’s net loss would have stood at ₹23 crore in the absence of the exceptional item on its balance sheet.