IPO-Bound Swiggy To Fire 350-400 Employees To Cut Costs

IPO-Bound Swiggy To Fire 350-400 Employees To Cut Costs

SUMMARY

The layoffs are likely to impact employees across departments, but the tech customer support could be hardest hit

Swiggy is under pressure from its existing investors Prosus and SoftBank to show profitability before the firm files its draft papers with SEBI for its IPO

Last year, the Bengaluru-based unicorn claimed that its food delivery business achieved profitability as of March 2023

Joining the long list of Indian startups that have been trimming their headcount to cut costs amid the unrelenting funding winter, food delivery giant Swiggy is likely to lay  off 400 employees, or around 6% of its total workforce, as part of a corporate realignment process.

The layoffs could impact employees across departments, but the customer support and tech teams took the hardest hit, sources told Inc42.

They added that the company began the restructuring drive last month in its Bengaluru office and it is still ongoing. It is likely to impact employees across sales, customer service, and tech teams.

“During the town hall held late last year, the management made it clear that the emphasis will be on profitability. As a result of this, the pressure on the employees to meet the targets had grown. Many employees, especially in the tech department, have been looking for jobs and some top senior executives already quit,” a former Swiggy employee told Inc42.

The sources added that there are apprehensions that Swiggy might cut further roles in the tech and sales teams. “Those employees who came at a very high salary are being shown the door,” one of the sources said.

A questionnaire sent to Swiggy on the development didn’t elicit any response till the time of publishing this story.

This is the second round of layoff undertaken by the startup in the past one year. In January 2023, Swiggy fired 380 employees in a restructuring exercise.

The latest development comes at a time when Swiggy is looking to go for an initial public offering (IPO) this year. The company is looking to show improvement in its financial numbers before filing its draft papers.

The sources said there is immense pressure on Swiggy CEO Sriharsha Majety from its investors Prosus and SoftBank to show profitability before filing the draft red herring prospectus (DRHP). The two investors are eyeing big returns from Swiggy’s IPO.

Swiggy posted a consolidated net loss of INR 3,629 Cr in FY22, while its revenue stood at INR 5,704.9 Cr.

Last year, Majety claimed that the firm’s food delivery business achieved profitability as of March 2023.

“Our sharp focus on innovation, coupled with strong execution has led to yet another milestone – As of March 2023, Swiggy’s food delivery business has turned profitable (After factoring in ALL corporate costs; excluding employee stock option costs),” Majety said in a blog post.

Earlier, the CEO told Moneycontrol that the platform was seeing higher traction in its quick commerce business, Instamart, which could possibly drive more revenue for the company than the food delivery.

Swiggy has also shelved its plans of doubling platform fees to INR 10 from current INR 5.

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