Food delivery app Swiggy will cut 1,100 jobs across the country over the next few days, as it reels under the Covid-19 induced nationwide shutdown.
The development comes after rival Zomato said last week that it would lay off 13% of its workforce, or about 520 employees.
“The core food delivery business has been severely impacted and will stay impacted over the short term but is expected to start growing again after that. We also need to build a much leaner organisation and reduce costs to be able to withstand any further risks from the uncertainty,” Sriharsha Majety, cofounder and CEO, wrote in an email on Monday.
ET has seen a copy of the email, which was made public on the company’s official blog.
The biggest impact will be on the company’s cloud kitchens business, Majety said. “We are choosing to scale down or shut down adjacent businesses that are either going to be highly volatile or will not be highly relevant for the next 18 months,” he added.
Swiggy will also significantly reduce indirect costs like hubs and office infrastructure.
All impacted employees will receive at least three months’ salary, along with accelerated stock vesting, health insurance till December, and an extra month of ex-gratia for every year they have spent with the organisation, Majety said.
Last month, ET reported that Swiggy is letting go 1,000 people from its private brand kitchen team, while discontinuing operations at a few other centres.
The Bengaluru-based company recently closed its latest $150 million funding round, led by Naspers along with smaller investors Ark Impact, Korea Investment Partners, Samsung Ventures and Mirae Asset Capital Markets.
“While we are very fortunate to have raised capital just before Covid-19 hit and have sufficient runway today, it is incredibly important to prepare for worse scenarios in the macro environment and make sure we are protected.” Majety said.
Swiggy co-founder Rahul Jaimini also quit operating responsibilities earlier this month and subsequently joined career accelerator startup Pesto Tech.
Food-delivery volumes have dropped by 60-70% in the past two months compared to before the pandemic, as many restaurants remain shut and consumers keep away from ordering in. ET reported earlier that industry players expect four out of 10 restaurants to shutter permanently due to the ongoing crisis.
Over the past few months, both Zomato and Swiggy have entered the grocery delivery space and held discussions with state governments for home delivery of alcohol. Multiple internet businesses — including Oyo, Cure.fit, Udaan, BlackBuck, Treebo, Acko, Fab Hotels, Meesho, Shuttl, Capillary, Niki.ai, and Fareportal — have retrenched workers, including temporary staff, in the past few months.
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