In an email to its employees on Monday, food delivery app Swiggy announced that it was laying off 1,100 employees amid the Covid-19 pandemic.
This is 14% of the total employees Swiggy has.
“Today is one of the saddest days for Swiggy as we have to go through an unfortunate downsizing exercise. With a heavy heart, I have tried to share the reasons and details of the process below, because you deserve to know,” Sriharsha Majety, Swiggy co-founder and CEO, wrote in an email on May 18 that was later published as a blog on Swiggy’s website.
The email said that Swiggy had been hit badly by the pandemic and the step was taken so that it could “see through this winter”.
“We also need to build a much leaner org and reduce costs to be able to withstand any further risks from the uncertainty. We will have to reduce our expenses such that we can achieve profitability with a smaller order volume than hitherto planned,” the e-mail said.
The email mentioned that this would also affect their cloud kitchen business.
Reuters reported that Swiggy had about 8,000 employees on its payroll as of October last year.
The pandemic has clearly hit the food delivery apps business in India because of the nation-wide lockdown in India, with several restaurants shutting down.
The lay offs came as India entered the 4th phase of the lockdown that is likely to continue till May 31. In the first phase of the lockdown, home delivery of food had been prohibited by some state governments. The restaurant industry has been hit hard during the lockdown as they have not been allowed to open for service apart from takeaway and delivery.
As the number of Covid-19 cases in India soar, the future for many businesses, especially start ups have become uncertain.
Zomato’s hit too
The impact of the pandemic was also felt by Zomato, Swiggy’s rival that fired 520 employees just two days ago on Friday.
“While we continue to build a more focused Zomato, we do not foresee having enough work for all our employees. We owe all our colleagues a challenging work environment, but we won’t be able to offer that to ~13% of our workforce going forward,” Deepinder Goyal said in an email.
Goyal pointed out in his e-mail that the several restaurants had shut down permanently, more would shut down in the coming months.
The email said that those laid off would continue to receive 50% of their salaries for the next six months.
Zomato had about 4,000 employees, excluding contracted delivery workers or “riders”, a spokeswoman told Reuters.
(With Reuters inputs)