Paytm’s parent company, One 97 Communications, has laid off over 1,000 employees across different departments as part of a cost-cutting strategy. The decision, spanning the past few months, is projected to impact approximately 10% of Paytm’s total workforce, marking one of the most substantial job cuts within the Indian tech industry this year.
It comes in the wake of Paytm’s exit from small-ticket consumer lending and the ‘buy now pay later’ segment due to regulatory restrictions on unsecured loans imposed by the Reserve Bank of India (RBI). Data from Longhouse Consulting reveals that new economy companies have let go of over 28,000 employees in the first three quarters of this year, with 20,000 layoffs recorded in 2022 and 4,080 in 2021.
The majority of the job losses are expected to hit Paytm’s lending business, which saw considerable growth in the past year. The regulatory changes have impacted the company’s initiative, Paytm Postpaid, providing loans under Rs 50,000. Paytm is shifting its focus towards wealth management and insurance broking.
Following the announcement of withdrawing from Paytm Postpaid, the company’s stock saw a 20% drop on December 7. Responding to ET’s inquiries, a Paytm spokesperson contested the reported number of layoffs but confirmed the occurrence. The spokesperson mentioned the company’s goal to save 10-15% in staff costs during the current fiscal year. Many affected roles have been replaced by AI-led automation. The spokesperson also indicated a potential increase of 15,000 staff in Paytm’s core payments business in the coming year.
Paytm is actively engaged in developing new products for its wealth management vertical and aims to establish a robust insurance distribution business. These initiatives will lead to the recruitment of fresh talent while reducing teams in other areas. By the end of the fiscal year, Paytm aims to achieve the targeted 10-15% reduction in employee costs.
The layoffs have impacted employees across various departments, including payments, lending, operations, and sales. Performance concerns have been identified as the primary driver for these job cuts, as Paytm prioritizes measures to enhance profitability.
