Zomato, India’s dominant online food ordering platform, has begun a massive round of job cuts. The platform eliminated close to 600 customer support positions. The action taken for cost-saving during food delivery growth slowdown. Huge Blinkit losses have also shaken the quick commerce business of Zomato. The move shows company policy shifts towards growing use of automation and artificial intelligence (AI) in customer care.
Zomato Terminates 600 Staff in Cost-Saving Initiative
Reports show that Zomato terminated close to 600 employees within a year of their recruitment under the Zomato Associate Accelerator Program (ZAAP). The firm had originally hired 1,500 staff for customer support but has now let go a large number, stating poor performance and punctuality. Some staff members report that they were fired without warning or an opportunity for improvement.
Impacted employees, mainly from Gurugram and Hyderabad, were given one month’s salary as severance. However, social media posts indicate worries about job security for the remaining staff, with Zomato going ahead with its move towards AI-based automation.
Automation and AI: A New Strategy?
Zomato is adopting AI to replace human customer care agents to minimize operational expenses. The company has not made official statements regarding the layoffs but has been vocal in embracing AI within its business model. This push for automation seeks to simplify operations and improve efficiency but raises issues about how it affects user experience.
AI-powered customer support has been a rising trend in the market, with many companies using chatbots and machine learning algorithms to address user inquiries. Although this can be frustrating for customers who want to deal with human beings for complex problems.
Zomato’s Business Challenges
The Zomato layoffs also highlight bigger issues at its core business. The food delivery growth slowdown, and its quick commerce segment, Blinkit, remains loss-making showing its financial struggles. However, after the news of job cuts, shares of the company rose 0.84% to ₹203.20, but investors are cautious.
Bank of America (BofA) recently lowered Zomato’s stock rating from ‘buy’ to ‘neutral’ as a result of the slacking food delivery segment and growing competition in quick commerce. The brokerage house also cut Zomato’s target price from ₹300 to ₹250. Thus, raising doubts about the company’s long-term profitability.
Employee Backlash and Social Media Reactions
Layoffs have triggered a debate on boards such as Reddit, where now-former staff members have exchanged stories. Someone claimed to be let go on average for having been late only 28 minutes over three months, with zero notice. Others have alleged that the organization treated staff like ‘disposables,’ pointing toward corporate ethics against mass layoffs.
Can Layoffs Fix Zomato’s Issues?
Though cost-saving by AI and automation can lower immediate costs, it does not directly solve Zomato’s problem, sluggish growth in food delivery and Blinkit losses. The company should look into new revenue streams, improve customer retention, and streamline its quick commerce model for long-term profitability.
Moreover, the downsizing might hit brand perception and employee morale, which could affect Zomato’s hiring and retaining top talent. As competition from Swiggy and Zepto heats up, strategic investments in customer experience, innovation, and market expansion will be more beneficial compared to mass-scale layoffs.
Conclusion
Zomato’s move to fire 600 staff is a display of its financial woes and the general crisis plaguing the food delivery sector. Although AI-powered automation may reduce costs, it is uncertain whether it will improve efficiency or chase away consumers. Zomato may succeed if it finds a way to balance cost-cutting with long-term growth plans.
