Swiggy plans to lay off 380 jobs and shut down its meat marketplace as the Prosus Venture and SoftBank-backed Indian food delivery giant looks to navigate the market downturn that has forced firms to become leaner and more disciplined.
In an email to employees on Friday, Swiggy co-founder and chief executive Sriharsha Majety said the startup has advanced its plans for profitability and needs to make difficult decisions to conserve cash. The Bengaluru-headquartered startup, which was valued at $10.7 billion in a funding round in January last year, employs about 6,000 individuals.
Majety said the startup, as with other firms in the category globally, over projected growth in food delivery. “This meant that we needed to revisit our overall indirect costs to hit our profitability goals.. 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 inline with the projections for the future. Our over hiring is a case of poor judgement, and I should’ve done better here,” he wrote to employees.
“Over the last year, we’ve also identified many areas for improvement in our pace of execution. Due to the iterative build-up of the different orgs, there have been some extra layers created in pockets. This definitely increased our communication overhead, and compromised our agility. This meant that instead of doing more with less, we were doing less with more in these cases.”
Majety said the startup plans to also shut down its meat marketplace “effective very soon.”
“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 impacted employees will be paid a severance of three to six months and additional days based on each year of service at the startup, Majety said in the email. Swiggy will also accelerate their vesting cliff and is providing medical insurance for them and their dependents until May this year.
Job cuts, in full swing last year, have bled into 2023. Scores of startups — including Zomato, Ola, Byju’s, Unacademy, Cashfree, CoinDCX, Dunzo and ShareChat — have laid off staff in recent months. According to industry estimates, more than 20,000 people in the startup workforce in India have lost their jobs since the market downturn.
Swiggy hired a group of bankers last year to evaluate plans for a $1 billion initial public offering for 2023, TechCrunch reported earlier. It’s currently waiting for the market conditions to change before going ahead with the plan.
The funding winter for the startup ecosystem may continue for another 12 to 18 months and the industry might have to grapple with a “lot of turmoil and volatility,” e-commerce giant Flipkart chief executive Kalyan Krishnamurthy warned late last year.
“My estimate is that a lot of startup founders will hit the market between April to June next year, and that’s the moment of truth for the ecosystem,” he said.