Paytm Will Fire 500 Employees From These Locations; About To Raise Another $1 Billion Funding

The eCommerce payment platform, Paytm is in discussion with multiple investors, including former UK Prime Minister David Cameron in hopes to raise another round of funding of $1 billion.

Also, the company is also cutting jobs for 500 employees at mid and junior levels according to sources.

While the company is working on trimming its costs, it seems that Paytm is leaving no stone unturned to make money simultaneously.

How Will These Funds Be Utilized?

According to sources, these fundraising plans are still under discussions and may take some weeks time to get finalized.

The source said that the funds will be utilized to expand the merchant offerings across India to strengthen the company with technology and various other services.

Earlier this week, Paytm had announced about a $1 billion (around ?7,173 crore) fundraise led by US-based asset management firm T Rowe Price. 

This round was attended by existing investors including Alibaba, Softbank and Discovery Capital in the funding round. (Reference)

Why Is Paytm Set To Lay Off Employees?

The other news which is coming in about Paytm is that they are the process of laying off over 500 employees at mid and junior levels, according to sources. 

They said that the Noida-based firm has been cutting down its workforce for the past few days across four main verticals including the KYC, O2O, retail and transportation teams. 

“Many state heads, including junior managers and team leads, have been asked to resign abruptly. The firm is offering two-month severance packages to those who are being fired,” they said.

Who Has Got Affected By These Lay Offs?

Sources said that Paytm is trimming jobs across the country. These layoffs are in line with its strategy to curb expenses.  

The maximum layoffs recorded in Maharashtra, Gujarat, Rajasthan, Madhya Pradesh and a few southern states. 

Many new joiners who recently joined the firm, some as early as a month ago, have received a letter from One97 Communications and Paytm Services, asking them to leave immediately.

What Does Paytm Has To Say?

So far Paytm has kept quiet on this topic of fundraising but on Thursday, Vijay Shekhar Sharma, the Paytm founder and Chief Executive Officer tweeted a photograph of him and Cameron.

He said “With so inspiring and savvy @David_Cameron in Singapore! Thanks Sir for your lesson on giving back to society and creating social impact with business,”.

Paytm had informed that it is planning to invest around USD 1.4 billion over the next three years to expand financial services on Monday.

While talking about the layoffs, the Paytm spokesperson said “Joining and leaving an organization is a part of the normal process. We have a well-structured system to assist our colleagues in their journey with Paytm. Performance is also evaluated from time to time, based on which certain decisions may be taken,”. (Reference) 

But the sources said that “Paytm didn’t want any negative coverage in the press before raising the round that was in work for months,”. As the company did not wish to be named.

Why Would This Happen?

Media reports are indicating that the SoftBank has changed its strategy as far as its portfolio companies are concerned. 

Not like earlier when the formidable investor had mandated investee companies to chase growth at any cost, the company is asking them to go for a sustainable path and chase profitability.

This change in the SoftBank strategy is affecting the Indian economy too. Although their spokesperson said that they don’t comment on their portfolio companies.