In a significant move, Paytm’s parent company, One97 Communications Limited (OCL), has announced layoffs as part of a broader restructuring effort. The exact number of employees affected by these layoffs has not been disclosed. The company, however, is taking steps to ensure a smooth transition for those impacted.
Outplacement Support
OCL has committed to providing outplacement support to employees who have resigned due to the restructuring. In a statement, the company said, “One97 Communications Limited (OCL) is providing outplacement support to employees which have resigned as a part of the restructuring efforts by the company. The company’s human resource teams are actively collaborating with over 30 companies that are currently hiring, and providing assistance to employees who have opted to share their information, facilitating their immediate outplacement.” This initiative aims to help employees find new opportunities quickly, leveraging OCL’s network of hiring companies.
Bonus Disbursements
Alongside the layoffs, Paytm is also ensuring that employees receive their due bonuses. The company stated, “Paytm is also disbursing bonuses which were due to employees, ensuring fairness and transparency in the process.” This move is seen as a measure to maintain morale and acknowledge the contributions of the outgoing employees.
Impact of RBI Ban and Financial Performance
The layoffs come in the wake of a challenging period for Paytm. In the March 2024 quarter, the company saw its sales employee headcount drop by about 3,500 to 36,521 personnel. This reduction followed the Reserve Bank of India’s (RBI) ban on several services of Paytm Payments Bank. The ban prevented the Paytm associate from accepting deposits, credit transactions, or top-ups in any customer accounts, wallets, and FASTags.
The financial impact of these regulatory restrictions has been significant. In Quarter 4, Paytm reported a loss of ₹550 crore, a sharp increase from the ₹167.5 crore loss reported in the same period the previous year. Despite these setbacks, Paytm’s share price recently gained over 8.5%, crossing the ₹400 mark after eight weeks, indicating a potential recovery in investor confidence.
Strategic Shifts Towards Profitability
In its FY24 earnings release, One97 Communications highlighted its ongoing efforts to streamline operations and focus on core business areas. The company stated, “As part of its FY24 earnings release, One97 Communications stated that it will be pruning its non-core business lines, and will continue its efforts to maintain a leaner organisation structure through AI-led interventions. The company has been actively working towards driving profitability, in line with its guidance.” These measures are aimed at enhancing efficiency and steering the company towards a more sustainable financial future.
Conclusion
Paytm’s recent layoffs and restructuring efforts reflect the company’s strategic shift towards profitability and streamlined operations. By providing outplacement support and disbursing due bonuses, Paytm is attempting to manage the transition for affected employees with fairness and transparency. As the company navigates these changes, its commitment to maintaining a leaner and more focused organizational structure remains central to its future plans.
