In a significant move taking away mass jobs, One 97 Communications, the parent company of Paytm, has laid off more than 1,000 employees across multiple units, affecting approximately 10% of its overall headcount. The decision to trim the workforce comes as part of the company's strategic efforts to cut costs and realign its various businesses.
Social Media Backlash
As news of the mass layoffs spread through media channels, social media platforms were inundated with a wave of angry reactions from users. Many critics questioned the ethical considerations of cutting jobs for a company classified as a unicorn, emphasizing the importance of prioritizing employee well-being over cost-cutting measures. Some users even attributed the job cuts to the increased integration of Artificial Intelligence (AI) in the company's operations.
PayTM recently fired 1000+ employees.— Akshat Shrivastava (@Akshat_World) December 26, 2023
Sometimes I feel that what's the point of being a Unicorn, if you have to 'hire fast' and 'fire fast'
I get capitalism, but: when you fire someone, it shatters their confidence & self-image.
They have to go back to their…
Unfortunate but changing times. The incoming workforce (ppl in their 20s, early 30s) should expect 2-3 layoffs throughout their career. The focus should move from regret to preparation (mentally & financially). I might have made this sound easy, it isn't!— Shankar Nath (@shankarnath) December 26, 2023
It's tough to see this happening. True success is about sustainable growth, not just reaching unicorn status. People's well-being should come first.— Priyank Ahuja (@ahuja_priyank) December 26, 2023
Companies are firing, there aren't much openings, inflation is rising, rents especially, taxes are never been so high before.— Apurv Anand (@apurv_anand) December 26, 2023
Total circus right now
Company Spokesperson's Response
Responding to the criticism, a spokesperson for Paytm told a media, "We are transforming our operations with AI-powered automation to drive efficiency, eliminating repetitive tasks and roles to drive efficiency across growth and costs, resulting in a slight reduction in our workforce in operations and marketing."
The spokesperson highlighted the company's expectation to achieve significant cost savings through AI-led automation, stating, "We will be able to save 10-15 per cent in employee costs as AI has delivered more than we expected it to. Additionally, we constantly evaluate cases of non-performance throughout the year."
Impact on Overall Headcount
The layoffs, affecting at least 10% of the company's total workforce, mark the most substantial reduction implemented by an Indian new-age tech company in 2023. The majority of job losses occurred in Paytm's lending business, which experienced significant expansion over the past year. Paytm aims to achieve a 10-15% reduction in staff costs for the current fiscal year through the implementation of artificial intelligence-led automation.
Shift in Paytm's Business Strategy
The company's strategic decisions are further evidenced by its recent withdrawal from small-ticket consumer lending and the 'buy now pay later' segment. This move follows a regulatory clampdown on unsecured loans by the Reserve Bank of India (RBI). Paytm's stock witnessed a sharp decline, hitting the lower circuit with a 20% drop on December 7, the day after the company announced its decision to exit Paytm Postpaid and adopt a cautious approach toward small-ticket loans.
Focus on Wealth Management and Insurance
With the evolving regulatory landscape, Paytm is now redirecting its efforts toward wealth management and insurance broking. Under the Paytm Postpaid initiative, the company disbursed loans of under Rs 50,000. The strategic shift aims to position Paytm in more stable and compliant financial sectors.
The layoffs have affected employees across various departments, including payments, lending, and executives in operations and sales. The move reflects Paytm's commitment to streamlining its workforce and operations in response to changing market dynamics and regulatory challenges.
The implementation of these layoffs, driven by a combination of cost-cutting measures and strategic realignment, underscores the evolving landscape of India's tech industry and the challenges faced by companies seeking to navigate regulatory changes and economic uncertainties.
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