Why Zomato Laid Off 600 Employees | 3 Key Reasons Explained

Zomato Layoff News: Zomato , the popular online food delivery platform, has laid off up to 600 customer support employees within a year of hiring them. While the company is yet to release an official statement, this move has raised questions about the factors influencing the decision.   

3 Likely Reasons For Zomato’s Decision to Lay Off 600 Employees:

• Slowdown in Food Delivery Growth: Zomato's core food delivery business has faced a slowdown, impacting its overall growth. This reduced demand for human customer support roles in a more stable and established part of the business led to the need for job cuts.
• Rising Losses in Blinkit: Zomato’s subsidiary, Blinkit, a quick commerce platform, has been struggling with rising losses. In order to cut costs and improve profitability, Zomato might have to make difficult decisions, including reducing its customer support workforce.
• Efficiency of AI-Powered Platform 'Nugget': Zomato introduced its AI-powered customer support platform, Nugget, which has successfully handled over 80% of customer queries without human intervention. As a result, the need for a large number of customer support staff diminished, leading to layoffs as the company relies more on automation to handle customer interactions.

If reports are to be believed, Zomato onboarded 1,500 individuals, a year back through its Zomato Associate Accelerator Program (ZAAP) for customer support positions. These employees were offered the chance to explore various roles across sales, operations, program management, support, supply chain, and category teams.

However, many of these contract workers saw their contracts not being renewed after their term ended. As per former and current employees, those impacted were provided with one month's salary as compensation and were dismissed without prior notice, with reasons cited such as poor performance and punctuality.  

In December 2022, Zomato let go of approximately 100 employees, accounting for about 4 percent of its total workforce, across various departments, including product, tech, catalog, and marketing. The company reported a 57 percent year-on-year decrease in its quarterly profit after tax (PAT), which dropped to Rs 59 crore in Q3 FY25, down from Rs 138 crore during the same period last year, and Rs 176 crore in Q2 FY25.

On the other hand, Zomato’s revenue from operations surged by 64 percent year-on-year, reaching Rs 5,404 crore in Q3, compared to Rs 3,288 crore a year earlier, and Rs 4,799 crore in the previous quarter.