Amid ongoing challenges at fintech giant Paytm, its parent company, One97 Communications, is reportedly considering significant layoffs to trim employee costs. The company may cut around 15-20% of its workforce in the current fiscal year.
Cost-Saving Measures
Paytm has initiated a plan to save between INR 400-500 crore in employee costs, potentially leading to the reduction of 5,000 to 6,300 jobs, according to a Financial Express report. The company’s annual report for FY23 indicated that it had an average of 32,798 employees, with 29,503 actively on-roll and 1,589 off-roll employees worldwide. In FY24, the number of employees increased significantly, with over 36,000 sales employees alone, although the total number of employees for FY24 has not been disclosed.
Focus on Efficiency
In a recent earnings statement, Paytm acknowledged the increase in employee costs due to investments in technology, merchant sales, and financial services. However, the company plans to continue investing in these areas while expecting reductions in other employee costs. “We expect annualized people cost savings of INR 400 – INR 500 crore,” Paytm stated.
Ongoing Downsizing
The downsizing process is already in motion. In December, reports indicated that 1,000 employees were laid off across various departments. According to Paytm’s FY24 earnings report, the company let go of more than 3,500 sales employees between December 2023 and March 2024, reducing the number from over 40,000 to around 36,500.
Leadership’s Assurance
Interestingly, Founder Vijay Shekhar Sharma, in his first direct address to the workforce since the RBI directive on January 31, assured staff that there would be no layoffs. Despite this assurance, the company has continued to cut jobs in response to financial pressures.
Regulatory Challenges
Paytm has faced significant regulatory challenges since January 31, when the Reserve Bank of India (RBI) restricted Paytm Payments Bank from accepting additional deposits and top-ups. Following the RBI’s restrictions, Paytm’s net loss widened over threefold year-on-year to INR 550.5 crore in the March quarter (Q4) of FY24, up from INR 167.5 crore in the same period the previous year.
Financial Performance
Paytm’s revenue from operations decreased by 2.9% year-on-year to INR 2,267.10 crore in Q4 FY24, compared to INR 2,334 crore in the same period last year. This also marked a 20% decline from the previous quarter. The company’s shares continued to decline, dropping over 4% during trading on Friday, May 24, following the release of its March quarter results.
