In May 2020, food tech company Swiggy faced the harsh reality of the COVID-19 pandemic's impact on their business, resulting in the layoff of around 1,100 employees across various grades and functions. This article will delve into the reasons behind these layoffs, the support provided to the affected employees, and the potential future impact on both the company and the food tech industry as a whole.
Swiggy's decision to lay off around 1,100 employees was described by CEO Sriharsha Majety as the hardest and longest deliberated one the management team has faced. The layoffs were a result of the company's plan to scale down or shut adjacent businesses that are either volatile or not relevant for the next 18 months, with the cloud kitchens business being particularly impacted due to uncertainties about volumes throughout the year. These layoffs were also part of Swiggy's cost-cutting plan in response to the economic pressures caused by the COVID-19 pandemic.
Impacted employees were provided with at least 3 months of salary, regardless of their notice period or tenure. Swiggy also offered an extra month of ex-gratia in addition to their notice period pay, which could amount to between 3-8 months of salary depending on the tenure. The company extended Esop vesting to the nearest quarter and waived off the one-year cliff for employees who had not completed one year. It's worth noting that Swiggy's rival, Zomato, also laid off around 520 employees and provided them with 50% of their salary for the next 6 months.
Swiggy's recent announcement to lay off employees is primarily driven by its goal to achieve profitability ahead of its planned initial public offering (IPO). This round of layoffs will affect various teams, including technology and customer care, with a particular emphasis on simplifying work processes and enhancing operational efficiencies.
Looking forward, Swiggy aims to position itself favorably in the competitive food delivery market, which includes major players like Zomato. By focusing on operational efficiency and profitability, Swiggy is setting a foundation for long-term success and market competitiveness.
Swiggy's layoffs may signal a broader trend in the food industry, as companies face the challenges posed by the COVID-19 pandemic. Scaling down or shutting adjacent businesses, particularly cloud kitchens, could lead to a shift in focus towards core services and products. As layoffs and pay cuts become more common, the industry may see increased competition and consolidation. The long-term effects of these changes on the food industry remain uncertain, but it's clear that companies like Swiggy and Zomato are adapting to navigate the current crisis.
Swiggy's layoffs, driven by the need to scale down or shut adjacent businesses and cut costs amid the COVID-19 pandemic, provided affected employees with financial support. These developments may lead to a shift in focus towards core services and increased competition in the food industry. The long-term effects remain uncertain, but Swiggy's actions could potentially influence future strategic decisions and their standing in the market.
