As part of its most recent round of layoffs, Swiggy has announced that it will be terminating 380 employees. The affected employees have received an email from the company notifying them of the proposed layoffs of hundreds of employees. The CEO of the food delivery service, Sriharsha Majety, has apologized for Swiggy’s decision to reduce headcounts and provided a number of explanations for the layoffs.
“We’re implementing a very difficult decision to reduce the size of our team as a part of a restructuring exercise. In this process, we will be bidding goodbye to 380 talented Swiggsters. This has been an extremely difficult decision taken after exploring all available options, and I’m extremely sorry to all of you for having to go through with this,” the company’s CEO said.
Why is Swiggy firing hundreds of employees?
The difficult macroeconomic conditions Swiggy is dealing with are one of the main factors highlighted. The business disclosed that the slowing of the expansion of food delivery has led to lower income and profitability. However, Swiggy claims to have sufficient cash on hand to cover expenses. The management has also attributed its choice to fire workers to “overhiring.”
“Over the last year, under challenging macroeconomic conditions, companies around the world (public and private ) are adjusting to the new normal, with refreshed investment horizons and accelerated timelines for profitability. We’re no exception here and have already advanced our own timelines for profitability on food delivery and Instamart. While our cash reserves allow us to be fundamentally well positioned to weather harsh circumstances, we cannot make this a crutch and must continue identifying efficiencies to secure our long-term,” the CEO said.
The CEO further highlighted that, contrary to the company’s expectations, the growth rate for food delivery has slowed. In order to achieve the profitability targets, the company had to review its total indirect costs.
“While we’d already initiated actions on other indirect costs like infrastructure, office/facilities, etc, we needed to right-size our overall personnel costs also in line with the projections for the future,” he said. The executive also blamed the company’s “poor judgment” for “overhiring” and said that he “should’ve done better here.”
According to the company, affected employees will get cash compensation during the next three to six months. Based on their tenure and rating, it will be determined. People will either receive an assured three-month salary, 15 days of ex-gratia for each year of service that has been fulfilled, as well as any unused paid time off. To all those who are impacted, Swiggy will at least provide 3 months of payment, including variable pay or bonuses.
“The joining bonus and retention bonus will also be paid out will also be waived off. The annual vesting cliff has been waived. We will be extending vesting to the nearest quarter from the last working date. They will also be eligible to participate in the ESOP liquidity program slated for July 2023,” Swiggy said.
The additional advantages include continuing access to LinkedIn’s learning and wellness site through March of this year, career transition assistance for the following three months, and medical insurance coverage through May 2023. Additionally, Swiggy claimed that people who recently moved would be reimbursed for their moving costs if they choose to return to their prior location or permanent address. Additionally, one will be able to keep the laptops they were given for employment to continue their job search.
Swiggy will shut its meat market. Swiggy also intends to close its Meat marketplace because, despite numerous iterations, the company was unable to achieve product-market fit in this sector. However, the business will keep providing meat delivery through Instamart.
“While we continue to be fully committed to exploring new business opportunities, we have also taken a harder look at some of our existing new verticals. Effective very soon, we will be shutting down our Meat marketplace. While the team has done exceptionally well with solid inputs, we haven’t hit product-market fit here despite our iterations. From a customer perspective, we will still continue to offer meat delivery through Instamart. We will continue to stay invested in all other new verticals,” the CEO said in the email.