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Swiggy has laid off 380 employees from its workforce of 6,000, citing challenging macroeconomic conditions and a slowdown in growth of its food delivery business.
“This has been an extremely difficult decision taken after exploring all options, and I’m extremely sorry to all of you for having to go through with this,” Sriharsha Majety, Swiggy’s CEO, wrote in an email to employees.
“Our over-hiring is a case of poor judgement, and I should’ve done better here.”
Swiggy, which plans an initial public offering (IPO), is the latest start-up to lay off employees amid a funding winter.
“We’re no exception here and have already advanced our own timelines for profitability on food delivery and Instamart,” Majety stated. “While our cash reserves allow us to be fundamentally well positioned to weather harsh circumstances, we cannot make this a crutch and must continue identifying efficiencies to secure our long term.”
He said the food delivery business grew slower than what was projected, forcing the company to “revisit our overall indirect costs to hit our profitability goals”.
“While we’d already initiated actions on other indirect costs like infrastructure, office/facilities, etc, we needed to right-size our overall personnel costs also in line with the projections for the future,” he said.
Those laid off would receive a cash payout of three-six months’ salary, based on tenure and grade. This would include a 100 per cent payout of variable pay/ incentives. Further, the joining bonus and retention bonus paid out would be waived.
“The annual vesting cliff has been waived off. We will be extending vesting to the nearest quarter from the last working date. They will also be eligible to participate in the ESOP (employee stock ownership plan) liquidity programme slated for July 2023,” Majety wrote.
Medical insurance for the affected workers and nominated family members would last until May 31, 2023. They would also get career transition support for the next three months.
Those who relocated over the past year would have their expenses reimbursed if they return to their previous location or permanent address. Workers would also retain their work laptops.
Meat marketplace shut
The firm is also shutting down its meat marketplace.
“While the team has done exceptionally well with solid inputs, we haven’t hit product market fit here despite our iterations.,” said Majety. Swiggy will continue delivering meat to customers through Instamart.
Swiggy reportedly concluded its performance review in October 2022, following which several employees were brought under a performance improvement plan (PIP).
Reports last month indicated that the firm may lay off 250 employees. The decacorn — a company with a valuation of $10 billion or above – then had denied the reports, saying exits were “based on performance”.
Swiggy, in results for the previous financial year, reported that its losses widened 2.24 times to Rs 3,628.9 crore in FY22, from Rs 1,616.9 crore in FY21, fuelled by a 227 per cent rise in costs.
Expenses came in at Rs 9,748.7 crore in FY22, compared to Rs 4,292.8 crore the year before. This despite Swiggy reported revenue of Rs 5,704.9 crore, a little over twofold jump from the previous financial year.
Start-up layoffs
Indian start-ups across the board are sacking workers amid the funding winter. Food delivery firm Zomato in November laid off 3 per cent of its workforce of 3,800 as part of a cost-cutting exercise.
Recently, car repair start-up GoMechanic removed 70 per cent of its workforce as it struggled for funds.
Google-backed firms Mohalla Tech, the parent company of video-sharing platforms ShareChat and Moj, and quick commerce company Dunzo laid off 20 per cent and 3 per cent of their employees, respectively.
SoftBank-backed cab aggregator Ola dropped 200 employees last week. Before that, edtech start-up LEAD School fired 60 employees after sacking 100 in August 2022.
Tiger Global-funded Moglix, voice automation start-up Skit.ai, Sequoia-backed cloud kitchen unicorn Rebel Foods, and Unacademy-owned Relevel are among others to lay off employees.
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