Paytm is in the process of laying off over 500 employees at mid and junior levels, according to four people familiar with the matter. They said that the Noida-based firm has been trimming its workforce for the past few days across four main verticals including the KYC, O2O, retail and transportation teams.
“Many state heads, including junior managers and team leads, have been asked to resign abruptly. The firm is offering two-month severance packages to those who are being fired,” said two sources requesting anonymity.
The layoffs are in line with its strategy to curb expenses, added the sources. Maharashtra, Gujarat, Rajasthan, Madhya Pradesh and a few southern states recorded the maximum layoffs. Sources confirmed that job cuts are taking place across the country.
Entrackr spoke to at least half a dozen employees who were asked to resign over the last few days.
“We received calls from our immediate bosses saying that something isn’t right. Within hours, the human resource function called up and asked us to resign. We got a standard two months salary but asking abruptly to leave didn’t go well with us,” said the people who have been asked to leave the organisation.
Several employees who recently joined the firm, some as early as a month ago, have received a letter from One97 Communications and Paytm Services, asking them to leave immediately. According to the letter, which has been viewed by Entrackr, these employees have been asked to submit all their documents, software access, passcodes and other assets back to the company.
Responding to Entrackr’s queries, the Paytm spokesperson said: “Joining and leaving an organization is a part of the normal process. We have a well-structured system to assist our colleagues in their journey with Paytm. Performance is also evaluated from time to time, based on which certain decisions may be taken.”
After the WeWork debacle, several media reports have surfaced saying SoftBank has changed its strategy as far as its portfolio companies are concerned. Unlike in the past where the formidable investor had mandated investee companies to chase growth at any cost, it’s now asking them to go for a sustainable path and chase profitability.
The change in strategy for SoftBank appears to be reflecting in India, too. Paytm, which is one of the largest bets by Masayoshi Son-led conglomerate has been looking at ways to control its burn rate. When reached out for a comment, a SoftBank spokesperson said they do not comment on their portfolio companies.
This comes just days after Paytm raised $1 billion in a round led by US asset manager T. Rowe Price along with participation from existing investors. So, the question arises — why is it laying off more than 5% of its total employee base?
“Paytm didn’t want any negative coverage in the press before raising the round that was in work for months,” added two of the above four sources. They did not wish to be named.
The mass layoffs at mid and junior levels are taking place after the exodus of top-level employees since the beginning of this year. Many CXO level employees left including Kiran Vasireddy, Nitin Mishra, Deepak Abbot, Sujit Mishra and Nitin Sagar.
Sources also said that Paytm is likely to cut more staff in the coming months. Entrackr couldn’t confirm this immediately.
Even as it trims its costs, it looks like Paytm is leaving no stone unturned to make money simultaneously. The homepage of the mobile payments app displays an ad for the mobile phone OnePlus 7 Pro being sold on Amazon. When clicked, the link redirects to Amazon’s website for the user to make the purchase.
This could be a part of the strategy for Paytm Ads that Entrackr exclusively reported on last month. However, it remains unclear as to why Paytm would want to promote a business that directly competes with its e-commerce business — Paytm Mall.