On Friday, Zomato announced layoffs of around 520 people, or 13% of its total global workforce of nearly 4,000 employees, in order to reduce the economic impact it faced due to the COVID-19 epidemic. The Gurugram-based food aggregator, which operates in more than 24 countries around the world, has also introduced a temporary pay cut of up to 50% for its remaining employees, which will take effect from June. Zomato's new developments come just days after archivist Swiggy decided to fire about 900 employees from his cloud cooking business to overcome the impact of the coronavirus pandemic.
Those affected by the layoffs will continue to receive 50% salary for the next six months, or until they get a new job, whichever comes first, with their current health insurance.
Founder and CEO Deepinder Goyal in an email to Zomato employees explained the latest changes. "Our business has been severely affected by the COVID blockades," he said in the email, a copy of which was published in a Blog
"Complete change"
Goyal predicted that due to the pandemic, the number of restaurants would decrease by 25 to 40% over the next six to 12 months. This has already prompted Zomato to redefine its business strategy and make a "complete change" to become a transaction company first, he noted.
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Although Goyal said in the email that Zomato is "financially stable" and that he will continue to hire mainly in the engineering and product divisions, he is looking for ways to cut costs . The company has decided to make part or full work at home a permanent feature for its employees in order to reduce property costs. Likewise, you reduce wages for your entire organization.
"Lower cuts are proposed for people on low wages, and higher cuts (up to 50%) for people on high wages," Goyal wrote, adding that temporary wage cuts would be eligible for subsidies. 2X employees.
The grocery store as a temporary savior
Due to the spread of the coronavirus which has led to social distancing as a universal practice, Zomato, along with its competitor Swiggy, has started to authorize the delivery of groceries to India. Goyal's email pointed out that the company is already delivering groceries to 185 cities across the country and plans to bring a similar model to the United Arab Emirates (UAE) and Lebanon. In particular, the company opened its supermarket with more than 80 cities last year.
"We see long-term potential in this segment (of the grocery store)," Goyal said in the email. "The grocery store also fits perfectly into our vision of better nutrition for more people."
However, Zomato and other new entrants face stiff competition from existing competitors, including BigBasket and Grofers. The ease of the national closure would also affect grocery delivery operations as people are expected to start resuming offline purchases in the coming days.
Zomato and Swiggy also demand that the government authorize deliveries of alcohol through their platforms in India. This would help generate sales when people refrain from ordering prepared meals online. However, the government has not yet approved the two companies. But in the meantime, the National Indian Restaurant Association (NRAI) plans to make things even more difficult for food aggregators by launching its own food delivery platform to be launched soon.
Second layoff in one year
This new layoff is the second in a year, Zomato fired 541 people last September to promote automation and artificial intelligence (AI) in its operations. He also intervenes after the layoff planned by Swiggy last month. A spokesperson for Zomato at the time told Gadgets 360 that the company did not intend to fire any of its employees.
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