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Coronavirus fallout: Swiggy and Zomato lay off employees, CEO says business heavily impacted

The decision to cut 1,100 jobs was announced by the Swiggy's co-founder and CEO, Sriharsha Majety, in an email to the employees.

Following Zomato’s decision to lay off employees as the coronavirus crisis exacts an unprecedented economic toll, rival Swiggy has also decided to cut jobs. The online food ordering and delivering app has announced that it will be cutting 1,100 jobs along with shutting down its cloud kitchen business.

The decision to cut 1,100 jobs was announced by the Swiggy’s co-founder and CEO, Sriharsha Majety, in an email to the employees. “Today is one of the saddest days for Swiggy as we have to go through an unfortunate downsizing exercise. We, unfortunately, have to part ways with 1,100 of our employees spanning across grades and functions in the cities and head office over the next few days,” the company’s blog read.

The company has announced that they will pay 3-months worth salary and an extra ex-gratia salary of a month for each year they have spent with the company.

Majety informed that the advent of coronavirus crisis has unfortunately pumped the brakes for the organisation’s recently charted out path to profitability that was chalked out last December. He added that as the organisation prepared itself in finalising the details of the exercise, it was hit by the body-blow of coronavirus which has wobbled the organisation and forced to reconsider its planned roadmap ahead.

“While Covid might have long-term tailwinds for the delivery business and digital commerce when things settle eventually, nobody knows how long the uncertainty will last. We, therefore, need to be prepared to see through this winter, to emerge stronger on the other side,” Majety said.

Talking about the economic impact of the lockdown, Majety said that the organisation’s core business has been at the receiving end of the economic inertia caused by the coronavirus induced lockdown. He also added that while the organisation had been fortunate to raise capital just before the COVID-19 crisis hit the country, as an organisation, they had to prepare for the worst case scenarios and salvage themselves from going belly up.

“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 need to hence prepare to come out stronger on the other side by continuing to build on capabilities that will help us make the most of the opportunity when things are better again. While we are very fortunate to have raised capital just before COVID 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 in the email to the employees.

Majety exhorted that the organisation needs to be leaner and reduce costs to protect themselves from being affected by any more volatility. He also claimed that the company needs to minimise the expenses and achieve greater profitability with small order volume than planned.

“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. The biggest impact here is on the cloud kitchens business, with many unknowns about volumes through the year. Since the onset of Covid, we have already begun the process of scaling down our kitchen facilities temporarily or permanently, depending on their outlook and profitability profile,” Majety added.

Zomato laid off 13 per cent workforce, 50 per cent salary cuts for the rest

Last week, another food ordering and delivery app Zomato announced the downsizing of the organisation as the coronavirus outbreak causes unprecedented economic damages. In an email to the employees, Deepinder Goyal, CEO and founder of Zomato, announced that the organisation has decided to part ways with 13% of its workforce and cut salaries up to 50 per cent for the remaining employees for six months.

The email that was sent on May 15 said that Zomato will let go 13 per cent of its global workforce of 4000 to reduce the economic impact it faced due to the COVID-19 outbreak.

“Our business has been severely affected by the COVID lockdowns,” he said in the email, a copy of which has been posted in a blog post from Zomato. “A large number of restaurants have already shut down permanently, and we know that this is just the tip of the iceberg,” Goyal added.

Ayodhra Ram Mandir special coverage by OpIndia

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OpIndia Staff
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Staff reporter at OpIndia

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