Zomato to lay off 13% of its workforce

Zomato has announced that it will trim 13% (around 520 employees) of its workforce as the food delivery business has been hampered by the ongoing Covid-19 lockdown. The development comes a month after the foodtech unicorn had announced voluntary pay cuts by the senior management.

“While we continue to build a more focused Zomato, we do not foresee having enough work for all our employees. We owe all our colleagues a challenging work environment, but we won’t be able to offer that to ~13% of our workforce going forward,” said Deepinder Goyal, CEO of Zomato in a note sent to company’s employees.

Goyal also thanked the employees who volunteered for pay cuts to support the company going forward.  Zomato will continue to cut salaries of employees depending on their designation.

Starting June, Goyal has proposed a temporary reduction in pay for the entire organisation. Lower cuts will be applicable to entry-level employees while higher cuts (up to 50%) for people with higher salaries.

Zomato will reimburse the loss in salary through 2X ESOP grants.

“We expect these cuts to be discontinued as soon as the economy starts getting back on track. I foresee (and hope) this to be around 6 months from now. We will speak about this in more detail during the upcoming global townhall," added Goyal.

Layoffs and salary cuts are becoming common across businesses such as food and travel. Zomato’s rival Swiggy has also set a plan to lay off up to 900 people and shut half of its cloud kitchens.

In the blog post, Goyal has made clear that Zomato will take at least six months to bounce back. In the coming weeks, more companies are expected to lay off a significant chunk of their workforce. Uber is also planning to let go of up to 700 employees in India.

Entrackr had exclusively reported the developments ( here & here) last month.

Zomato has also set an example for other large companies by saying that it will continue to support its employees who will be eventually laid off with 50% salary for the next 6 months.

Staff hired via manpower agencies will be supported with two months of severance pay. Importantly, each person leaving the company will also be allowed to keep their Zomato issued laptops and phones.

Zomato is also expanding its grocery and food delivery business locally as well as globally. It expanded Zomato Market to 185 cities in India and about to kick-off ops in UAE and Lebanon. The company also announced its entry into Turkey.