Zomato, the popular online food delivery platform, has reportedly laid off up to 600 customer support employees, just a year after hiring them.
The reported layoffs came as the company faces challenges in its core food delivery business and rising losses in its quick commerce subsidiary, Blinkit.
According to reports, the company had hired nearly 1,500 employees last year through its Zomato Associate Accelerator Program (ZAAP) to fill customer support roles. However, in recent weeks, many of these employees have been let go without any prior notice or opportunity to improve their performance, sources said.
The employees who were fired received one month’s salary as compensation, but the layoffs were reportedly based on issues like poor performance and punctuality.
AI Automation Behind Job Cuts
Zomato’s decision to reduce its customer support team is part of a broader strategy to cut costs, which includes leveraging artificial intelligence (AI) to automate customer support functions, reports indicate.
This move is seen as an attempt to reduce operational expenses as the company faces slower growth and higher losses in its business.
When contacted, the online food aggregator declined to comment on the layoffs.
Employee Concerns & Market Impact
The layoffs have affected employees in cities like Gurugram and Hyderabad, raising concerns among the remaining workforce regarding job security.
Several affected employees took to social media to share their experiences, with one user claiming that around 300 people were fired without prior warning.
Despite the layoffs, Zomato’s stock saw a slight increase of 0.84 per cent during Tuesday’s intra-day trading session, closing at Rs 203.20 per share.
Analysts’ Take: BofA Downgrades Zomato
Last month, Bank of America (BofA) downgraded its rating on Zomato, citing concerns over slowing food delivery growth and increasing competition in the quick commerce sector.
The brokerage revised Zomato’s rating from ‘buy’ to ‘neutral’ and reduced its target price from Rs 300 to Rs 250.
Despite the downgrade, some analysts remain optimistic about Zomato’s medium-term prospects, citing its expanding quick commerce initiatives.
