In a bid to streamline operations and curb costs, Paytm’s parent company, One 97 Communications, has reportedly initiated a substantial round of layoffs, impacting over 1,000 employees across various departments. This move marks one of the largest layoffs witnessed in the realm of Indian tech firms this year.
The decision to reduce its workforce comes as Paytm undergoes a comprehensive realignment of its diverse business ventures. With the objective of achieving financial efficiency, the company has implemented these cuts in recent months, affecting more than 10% of its entire workforce.
The restructuring process is expected to extend beyond the current layoffs, hinting at the possibility of further job cuts in the upcoming months. Paytm’s strategic reassessment aligns with broader industry trends, as several new-age tech firms grapple with economic shifts, funding challenges, and the need for operational restructuring.
Notably, the majority of the layoffs within Paytm are anticipated to impact its lending business, which has witnessed substantial growth in the past year. Sources suggest that the company’s lending arm, particularly the Paytm Postpaid service offering loans under ₹50,000, is likely to be the focal point of these reductions. Additionally, Paytm Postpaid is set to venture into wealth management, signaling a shift in its business trajectory.
Despite the overall success of Paytm’s lending business, the company’s stock experienced a significant setback, plunging approximately 20% on December 7. This decline followed the announcement of the discontinuation of the Paytm Postpaid loan plan, which had contributed to the platform’s comprehensive financial services.
The layoffs at Paytm contribute to the larger trend of workforce reductions in Indian startup companies throughout 2023. Data from Longhouse Consulting reveals that new startups accounted for a staggering 28,000 job cuts this year, a notable surge compared to 2021 and 2022.
Notable tech startups, including PhysicsWallah, Udaan, Third Wave Coffee, and Bizongo, experienced high layoff rates in 2023. In contrast, industry giants like Flipkart and Byjus opted not to provide appraisals to their top performers this year.
As Paytm navigates this significant workforce restructuring, the company aims to position itself for sustained growth and adapt to the evolving dynamics of the tech industry. The broader implications of these strategic decisions will likely become more apparent in the coming months, shaping Paytm’s trajectory in the competitive landscape of India’s tech sector.