Paytm laid off more than 1,000 employees across various departments on Monday, marking one of the largest job cuts by an Indian Fintech company.
The mass culling comes as a result of Paytm making changes in its business and plans to reduce costs. The stripping down might lead to more employees losing their jobs in the next few months.
More than 10 per cent of Paytm's entire workforce stands to be affected by the move, which comes in the wake of the UPI platform stopping offering small-ticket consumer loans and its "buy now pay later" lending service.
The current sacking at Paytm was the result of the firm's AI push, which apparently rendered these workers redundant.
"We're using AI-powered technology to make our work more efficient. This means we're using machines to do repetitive tasks, which helps us save money and grow better. As a result, some jobs in our operations and marketing teams will be reduced, but this will make our overall work better.
"We expect to save about 10-15 per cent on employee costs because AI is working even better than we thought. Also, we regularly look at cases where people are not doing well in their jobs throughout the year," a spokesperson from Paytm told Moneycontrol.
According to sources, the job cuts primarily affect the lending team with an industry source telling Moneycontrol, "The lending business is performing well, but the team employed for it makes up more than 30 per cent of the total employees. They recently closed down small-ticket loans and 'Buy Now, Pay Later' services. There's pressure to reduce costs."
The person said the firm is planning to expand the platofrm by adding insurance and wealth services. "This is part of our focus on growing our existing businesses. After successfully using our distribution model for giving out loans, we're now using the same approach to grow new businesses."
During an analyst meeting, the company mentioned that postpaid loans could decrease by half, but it wouldn't impact margins or revenue significantly. The company clarified that Postpaid had the lowest take rate, and the revenue impact would be minimal.
The foreboding to the current cull were heard on December 7, when the company announced intentions to slow down its small-ticket postpaid loans while focusing on expanding high-ticket personal loans and merchant loans.
The decision hasn't been well received by brokerages firms, leading them to lower their revenue estimates for the company.
Paytm's stock has experienced a significant decline this year, dropping by approximately 20 per cent on December 7.
On October 20, One97 Communications, the parent company of Paytm, disclosed a consolidated revenue of Rs 2,519 crore for the second quarter ending September 2023.
This represents a growth of 32 per cent compared to the revenue of Rs 1,914 crore in the same period last year. The increase is attributed to improved payment processing margins and growth in loan disbursement for the company.
In the second quarter of the fiscal year 2023-24, the company reported losses amounting to Rs 292 crore. This marks a notable improvement compared to the loss of Rs 571 crore recorded in the second quarter of the fiscal year 2022-23.
According to ET, startups in India have laid off more than 28,000 employees sacked in the first three quarters of the year.
The trend follows a period of aggressive hiring in 2021.
The layoffs in 2023 add to the 20,000 job cuts in 2022 and 4,080 in 2021, with firms like Udaan, PhysicWallah, Bizongo, and Third Wave Coffee among the major ones to give their employees the pink slip.
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