One 97 Communications, the parent company of Paytm, has reportedly laid off over 1,000 employees across multiple units as part of its cost-cutting strategy amid a realignment of its various businesses, according to sources familiar with the matter.
The layoffs, executed over the past few months, are anticipated to impact at least 10% of the overall headcount, marking one of the most substantial job cuts witnessed in the Indian new-age tech industry this year.
Paytm Parent Company Implements Significant Workforce Reductions
The layoffs come in the wake of Paytm’s strategic decision to withdraw from small-ticket consumer lending and the ‘buy now pay later’ segment, following regulatory interventions by the Reserve Bank of India (RBI) regarding unsecured loans. Paytm’s move away from certain lending activities has necessitated organizational adjustments and cost-saving measures.
The majority of the job losses are expected to be concentrated in Paytm’s lending business, which had witnessed significant expansion over the past year. Paytm Postpaid, the company’s lending arm, had disbursed loans of under Rs 50,000. However, with the evolving regulatory landscape, Paytm is now focusing on wealth management and insurance broking, leading to a shift in its business priorities.
Challenges in the New Economy Landscape
This significant round of layoffs at Paytm is reflective of the broader challenges faced by new-age tech firms in the current economic landscape. Funding constraints and increased scrutiny on financial activities have compelled many startups to reevaluate their business models, resulting in job cuts. In the first three quarters of 2023, more than 28,000 employees were reportedly laid off across new economy companies in India.
Paytm’s Response and Future Focus
In response to the layoffs, a Paytm spokesperson disputed the reported number of job cuts but acknowledged the staff reductions. The spokesperson highlighted the company’s commitment to achieving a 10-15% reduction in staff costs throughout the fiscal year, driven by the implementation of artificial intelligence-led automation. Paytm emphasized a strategic shift towards AI-powered operations, eliminating repetitive tasks and roles to enhance efficiency and control costs.
Despite the workforce reduction, Paytm aims to bolster its core payment business by increasing manpower by 15,000 in the coming year. The company is actively focusing on building new products in its wealth management vertical and establishing a robust insurance distribution business. Fresh talent is reportedly being hired for these strategic initiatives, signaling a balancing act between workforce reductions and investments in key growth areas.
