Zomato Reduces Customer Support Workforce by 600 Amidst Business Challenges
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Synopsis
Zomato has reportedly laid off up to 600 customer support employees amidst challenges in its core food delivery business and losses in its quick commerce segment. This drastic move is part of a broader cost-cutting strategy leveraging AI for automation.
Key Takeaways
- Zomato laid off up to 600 staff in customer support.
- This follows the hiring of 1,500 employees last year.
- Laid off employees received one month's salary.
- The company is implementing AI to automate support tasks.
- Concerns are rising among remaining employees regarding job security.
New Delhi, April 1 (NationPress) Zomato, the well-known online food delivery service, has allegedly terminated the employment of up to 600 customer support staff, just a year after their recruitment.
This layoff reportedly comes as the company grapples with difficulties in its fundamental food delivery operations and escalating losses in its quick commerce division, Blinkit.
As per sources, the company had onboarded nearly 1,500 new employees last year under its Zomato Associate Accelerator Program (ZAAP) to fulfill customer support needs.
However, in recent weeks, numerous employees have been dismissed without any advance notice or a chance to enhance their performance, as stated in the report.
The employees who were let go received a month's salary in compensation; however, the layoffs were reportedly attributed to factors such as poor performance and punctuality.
Zomato's choice to diminish its customer support team is part of a larger strategy aimed at reducing costs, which includes the implementation of artificial intelligence (AI) to automate customer support tasks, the report noted.
This action is viewed as a means to lower operational costs as the company experiences sluggish growth and rising losses.
When contacted, the online food aggregator refrained from providing a comment at this time.
The job cuts have impacted employees in cities like Gurugram and Hyderabad, raising concerns among remaining staff regarding their job security, the report indicated.
Some affected employees took to social media to express their experiences, with one individual noting that approximately 300 people were terminated without warning.
Despite the layoffs, Zomato's stock experienced a modest rise of 0.84 percent during Tuesday’s intra-day trading, closing at Rs 203.20 per share.
Additionally, last month, Bank of America (BofA) downgraded its ratings for Zomato, citing worries about slowing growth in food delivery and intensifying competition in quick commerce.
The brokerage adjusted Zomato’s rating from ‘buy’ to ‘neutral’. Along with the downgrade, BofA also reduced the target prices for the food aggregator.
Zomato’s target price was lowered from Rs 300 to Rs 250. Nevertheless, analysts remain hopeful regarding the medium-term outlook for the company.
