Swiggy To Slash 8-10% Staff To Cut Costs Amid Funding Winter

Food delivery major Swiggy reportedly plans to fire around 8-10% of its workforce, or 480-600 employees, to reduce costs amid the ongoing funding winter. 

The layoff at Swiggy will impact its product, engineering and operations teams, Financial Express reported citing sources. The layoffs come at a time when the company is trying to turn operationally profitable before going for an initial public offering (IPO).

Citing a source, the report said that the foodtech unicorn has been shuffling teams for a while and the work pressure on the employees has increased sharply. It has also asked its employees to chase numbers and hit positive unit economics before the IPO.

The development comes over a month after Swiggy said that around 3% of its workforce would exit the startup following the conclusion of its performance review in October. Several media reports at that time reported that around 250 employees would be leaving the startup.

Sources cited by FE added that after the performance review, several employees were put under a performance improvement plan (PIP). Incidentally, Swiggy has also put in place a rating system within the organisation to gauge the performance of the employees on a scale of 0-5.

“Employees with a rating of 2 and below have received intimation about PIP and they will be the most impacted,” a source was cited as saying.

Inc42 has reached out to Swiggy for a comment on the matter. The story will be updated upon receiving a response from the company. 

Further, the top brass at Swiggy has also delayed filing the draft red herring prospectus for the IPO to December 2023 owing to the bloodbath in tech stocks on stock markets in India as well as abroad, the report said.

The Swiggy layoff comes at a time when the foodtech unicorn is saddled with losses and facing stiff competition from Zomato. 

Swiggy’s net loss jumped 2.2X to INR 3,628.9 Cr in FY22 from INR 1,616.9 Cr in FY21. The rise in the loss was primarily fueled by a jump in its expenses, which grew 2.3X to INR 9,574.5 Cr in FY22 from INR 4,139.4 Cr in FY21.

In terms of unit economics, Swiggy spent INR 1.6 to earn every INR 1 from operations in FY22.

It must be noted that Swiggy’s rival Zomato also let go of around 3% of its staff in December 2022 citing their poor performance.

The layoffs which began in the Indian startup ecosystem in 2022 have continued in 2023 as well. Nearly 15 tech startups have fired over 2,100 employees in January so far. Meanwhile, nearly one-third of these 15 startups attributed the layoffs to employee performance, including Rebel Foods, Moglix, UpScalio, LEAD and Exotel.