SUMMARY
The announcement was made at a town hall meeting conducted by Swiggy earlier on Friday (January 20)
Swiggy CEO Sriharsha Majety said that the growth in the food delivery segment has slowed down compared to expectations, forcing Swiggy to revisit its profitability goals
Impacted employees will receive at least a payout worth three months of salary, including all the bonuses and incentives
After multiple reports suggested food delivery giant Swiggy might fire as much as 10% of its staff, the decacorn on Friday (January 20) said that it is firing 380 employees as part of a restructuring exercise to cut costs.
Swiggy layoffs were announcement was made during a town hall meeting on Friday. Meanwhile, sources told Inc42 that the impacted employees lost access to organisation apps and software following the announcement.
“In this process, we will be bidding goodbye to 380 talented Swiggsters. This has been an extremely difficult decision taken after exploring all available options, and I’m extremely sorry to all of you for having to go through with this,” Swiggy founder and CEO Sriharsha Majety said in an email to the employees.
Majety added that the growth in the food delivery segment has slowed down compared to expectations, which has resulted in Swiggy having to revisit its profitability goals.
“While we’d already initiated actions on other indirect costs like infrastructure, office/facilities, etc, we needed to right-size our overall personnel costs also in line with the projections for the future,” added the CEO.
Majety said that companies across the world are adjusting to the new normal due to challenging macroeconomic conditions and most of them have refreshed investment horizons and accelerated timelines for profitability.
Saying Swiggy is no exception to this, Majety said, “(We) have already advanced our own timelines for profitability on food delivery and Instamart. 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…”
Swiggy saw its expenses grow 2.3X to INR 9,574.5 Cr in FY22 from INR 4,139.4 Cr in FY21. At the same time, its revenue from operations rose 2.2X to INR 5,704.9 Cr from INR 2,546.9 Cr in the previous year. In all, Swiggy’s losses for FY22 stood at INR 3,628.9 Cr, 2.2X higher than INR 1,616.9 Cr in FY21.
The impacted employees will first have a 1:1 meeting with their managers. After the meeting, they will be entitled to benefits from the employee assistance plan that the food delivery decacorn has created.
The plan includes at least a payout worth three months of salary, including all the bonuses and incentives. Further, employees can also avail of the payout equivalent to their notice period, plus 15 days ex-gratia for every completed year of service, along with balance earned leave as per policy, whichever is higher.
The startup is also allowing outgoing employees to keep their laptops and has extended medical insurance coverage till May 31, 2023. Further, the startup will be extending vesting to the nearest quarter from the last working date. They will also be eligible to participate in the ESOP liquidity program slated for July 2023.
Swiggy will also be shutting down its meat marketplace soon, as the food delivery major has been unable to find a product-market fit in the segment. However, it will keep delivering meat via Instamart.
The startup’s meat marketplace is currently live in places such as Delhi NCR and it saw Swiggy partner with D2C meat brands such as Licious to deliver meat products to customers in certain cities.
The layoffs at Swiggy come a month after both Swiggy and its rival Zomato saw hundreds of performance-related exits. According to several media reports, while Zomato fired around 100 employees, Swiggy fired 250 employees.
The year 2023 has started in the worst possible manner in terms of mass layoffs, as 16 startups have already laid off nearly 2,500 employees in the past 20 days, including Swiggy. Since the start of last year, 70 Indian startups have laid off close to 21,000 employees, according to Inc42’s ‘Indian Startup Layoff Tracker’.
