Key Takeaways
- Zomato has laid off 600 employees due to a slowdown in food delivery and losses in its Blinkit division.
- The company is increasing its investment in AI, launching an AI-powered customer support platform named Nugget.
- Despite the layoffs, Zomato’s revenue from operations rose 64% year-on-year in Q3 FY25.
Company’s Layoff Decisions
Zomato has reportedly laid off 600 employees amid a decline in its food delivery sector and increasing losses in its quick commerce service, Blinkit. According to a MoneyControl report, the layoffs come as part of the company’s broader strategy to reduce costs and automate customer support functions through Artificial Intelligence (AI).
A year prior, Zomato had expanded its workforce by hiring 1,500 employees under the Zomato Associate Accelerator Program (ZAAP), aimed at filling various roles in customer support, sales, operations, and more. However, many of these contractual positions have not been renewed, leading to the recent layoffs which affected primarily customer support staff. Those impacted received one month’s salary as compensation and were terminated without notice, with performance and punctuality cited as reasons for their dismissals.
Investment in Technology
In parallel to the layoffs, Zomato is increasing its focus on AI technologies, notably through the introduction of Nugget, an AI-driven customer support platform. Nugget is currently managing over 15 million customer interactions monthly for Zomato, Blinkit, and Hyperpure, aiming to enhance efficiency and reduce operational costs.
Challenges in Market Performance
Zomato’s challenges have been compounded by a slowdown in overall consumption and struggles to scale operations beyond major urban areas. The food delivery business is facing tough competition, while Blinkit is grappling with financial losses incurred due to rapid expansion efforts.
Previously, in December 2022, Zomato had laid off approximately 100 employees, around 4% of its workforce, stemming from various departments including product and marketing. The company also reported significant financial declines, with its profit after tax dropping 57% year-on-year to Rs 59 crore in Q3 FY25, down from Rs 138 crore the previous year. Despite this drop in profit, Zomato’s revenue from operations improved significantly, rising 64% year-on-year to Rs 5,404 crore during the same period, compared to Rs 3,288 crore a year earlier.
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