Swiggy Lays off 1,100 Employees As Covid-19 Crisis Impacts Business ‘Severely’

Swiggy axed 1,100 jobs as India’s largest online food delivery platform looks to cut costs after the new coronavirus pandemic disrupted business.

“The core food delivery business has been severely impacted and will stay impacted over the short-term," Sriharsha Majety, co-founder and chief executive officer at Bundl Technologies Pvt. Ltd., said in a letter to employees. The firm had raised capital just before Covid-19 crisis hit and have sufficient runway, but it is preparing for worse scenarios in the macro environment, he said.

“While Covid-19 might have long-term tailwinds for the delivery business and digital commerce when things settle eventually, nobody knows how long the uncertainty will last,” the letter shared on the company’s blog read.

All affected employees, Majety said, would receive at least three months’ salary, irrespective of their notice period or tenure. For every year the employee has spent with the firm, they will be offered an extra month of ex-gratia, besides their notice period pays, he said.

“Our primary objective is to ensure that all employees who are leaving us are able to meet their financial commitments and expenses till they find another role. We also want to display our gratitude to team members who have worked with us for longer and have made sustained contribution,” Majety said.

Swiggy is also going to provide medical insurance to all employees and their family members till Dec. 31, and will help them in assisting alternative career opportunities. The firm will reimburse employees who had relocated to join Swiggy within the last one year and now wish to move back.

This comes days after rival Zomato laid off 13 percent of its workforce and cut salary of the rest of the employees. It expects the number of restaurants in India to shrink by 25-40 percent over 6-12 months as the lockdown has severely impacted businesses.

India had on March 24 entered the world’s biggest lockdown to combat spreading of the highly contagious pathogen. The nation extended the stay-at-home restrictions thrice—first till May 3, then May 17 and now until May 31—forcing businesses to either shut down temporarily or trim operations to survive. While the nation has eased some restrictions in the fourth phase, a complete recovery will still take time.

Trimming Operations

Swiggy is also looking to become a leaner organisation and cut costs to withstand further risks amid the pandemic.

The firm, Majety said, is looking to reduce expenses to achieve profitability with small order value. It’s scaling down or shutting down adjacent businesses that are 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,” Majety said.

The company said it has started the process of shutting down kitchen facilities temporarily or permanently, depending on its outlook and profitability profile. It’s already operating at significantly lower levels on staffing and physical infrastructure than their earlier footprint.