Paytm fires over 1,000 employees as it deploys more AI tech
Positioning itself as a long-term player in the fin-tech sector, Paytm has gone in for cost-cutting measures by firing over 1,000 employees largely in their lending business
In a significant move to optimise operations and reduce costs, fin-tech firm Paytm has fired over 1,000 employees, which will help the company to save 15 per cent of staff costs.
The layoffs are largely based on non-performance and due to the firm's decision to bring in more AI automation over the last one month to improve efficiency, said media reports.
The company spokesperson told the media that Paytm is transiting to AI-powered automation to improve efficiency. To be able to strike a balance between cost optimisation and growth and to position itself as a long-term sustainable player in the financial services sector.
In 2021, Paytm had let go of 500 to 700 employees based on non-performance.
In a report in Moneycontrol, a Paytm spokesperson clearly said that their "slight reduction" in their workforce in operations and marketing is to eliminate repetitive tasks and to drive efficiency across growth and costs.
They will be able to save 10-15 per cent in employee costs as AI has delivered more than they had expected, added the spokesperson, who also referred to how they also evaluated cases of non-performance throughout the year.
Cutting jobs in lending business
Further, media reports pointed out that Paytm has decided to cut jobs largely in their lending business, which grew a lot in the past year.
Though it was going strong, the team size they had employed within was more than 30 per cent of the total employees. Parallelly, the company reportedly plans to concentrate on improving its core payments business by hiring approximately 15,000 employees in the coming year.
Paytm will now focus on growing new products within its wealth management vertical and expanding its presence in the insurance distribution business.
Paytm Postpaid, known for granting loans below ₹50,000, is also transitioning towards wealth management. This move comes in the wake of the withdrawal of their small-ticket consumer lending and discontinuing their "buy now pay later" lending segment on the UPI platform.
Stock performance
The company faced a setback as its stock plummeted approximately 20 per cent on December 7.
One97 Communications, the parent company of payments major Paytm, on October 20 reported a consolidated revenue of ₹2,519 crore, up 32 per cent for the second quarter ended September 2023, as against a revenue of ₹1,914 crore last year, mainly on account of improving payment processing margins and growth in its loan disbursement.
Trend of job cuts
The layoffs by Paytms marks the growing trend of job cuts in Indian startups during 2023, with over 28,000 people laid off by new companies in just six months, said a report in ET.
Since 2022, layoff rates have been happening with even global tech giants Meta and Amazon significantly reducing its staff.
Other tech startups like PhysicsWallah, Udaan, Third Wave Coffee, and Bizongo have witnessed substantial layoffs this year. Additionally, industry giants like Flipkart and Byjus opted not to provide appraisals to top performers.
The Paytm layoffs also comes days after fintech startup ZestMoney shut down after an unsuccessful attempt to revive its business.
