5,000+ Layoffs Expected At Paytm Amid Push For Efficiency: Report

Amid the current crisis at fintech giant Paytm, One97 Communications, the parent company, is reportedly considering trimming employee costs, potentially cutting around 15-20% of its workforce in the current fiscal year.

Paytm has initiated an employee cost-saving plan of INR 400-500 Cr, potentially resulting in a workforce reduction ranging from 5,000 to 6,300, according to a Financial Express report. 

According to Paytm’s annual report, in FY23, the company had an average of 32,798 on-roll employees, with 29,503 actively on-roll and 1,589 off-roll employees worldwide, inclusive of all subsidiaries.

We also know that the company had 36,000+ sales employees in FY24, so the number of employees has grown significantly from FY23.

The total number of employees in FY24 has not been disclosed.

“In recent years, our employee costs have increased due to investments primarily in technology, merchant sales, and financial services. For the coming year, while we continue to invest in the merchant sales team, as well as risk and compliance functions, we expect reductions in other employee costs. We expect annualised people cost savings of INR 400 – INR 500 Cr,” the company said in an earnings statement. 

The process of downsizing is already underway, last year in December reports indicated that 1,000 employees lost their jobs across various departments. 

But as per the disclosures seen in Paytm’s FY24 earnings report, the company has let go of more than 3,500 sales employees between December 2023 and March 2024. This number has dropped from 40,000+ to around 36,500 in the quarter. 

Curiously, Founder Vijay Shekhar Sharma, in his first direct address to the workforce since the RBI directive on January 31, assured all its staff that there would be no layoffs.

The fintech company encountered trouble starting from January 31, when the Reserve Bank of India (RBI) restricted Paytm Payments Bank from accepting additional deposits and top-ups. 

After the RBI barred Paytm Payments Bank from onboarding new users and offering various services, including UPI payments and deposits, Paytm’s net loss widened over 3X on an year-on-year basis to INR 550.5 Cr in the March quarter (Q4) of the financial year 2023-24 (FY24) from INR 167.5 Cr reported in the year-ago period.

Revenue from operations decreased by 2.9% year-on-year to INR 2,267.10 Cr, compared to INR 2,334 Cr in the same period last year, marking a 20% decline from the previous quarter.

Besides, its shares continued on a downward trajectory on Friday (May 24) following its March quarter (Q4) results. Paytm stocks declined by over 4% during Friday’s session.