Paytm shares in red over pink slips amid AI automation

Paytm CEO Vijay Shekhar Sharma says the fintech firm would undergo major AI upgrades in 2024

Paytm shares fell nearly 1 percent on December 26 after the fintech major laid off over 1,000 employees from its operations, sales, and engineering team following AI technology implementation to boost efficiency.

According to a company spokesperson, Paytm is transforming its operations with AI-powered automation to drive efficiency, eliminating repetitive tasks and roles "to drive efficiency across growth and costs, resulting in a slight reduction in workforce in operations and marketing."

The layoffs are part of the lending team, sources told Moneycontrol. At 9:17 am, Paytm shares were trading half a percent lower at Rs 638.95 on the National Stock Exchange (NSE).

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"We will be able to save 10-15 percent in employee costs as AI has delivered more than we expected it to. Additionally, we constantly evaluate cases of non-performance throughout the year. Insurance and Wealth will be a logical expansion of our platform, in continuation of our focus on the existing businesses," Paytm's spokesperson told Moneycontrol.

"Having shown the strength of our distribution-based business model in loan distribution, we are expanding the same to focus on new businesses to drive scale," the Paytm spokesperson said further.

An industry insider reported that Paytm's lending business is robust, however, the team size they employed within was more than 30 percent of the total employees. "They recently shut down small-ticket loans and BNPL services. There is pressure to cut costs," they told Moneycontrol requesting anonymity. Previously in 2021, Paytm had laid off 500 to 700 employees based on non-performance.

For the quarter ended September 2023, the fintech firm reported consolidated revenue of Rs 2,519 crore, up 32 percent on-year, mainly on account of improving payment processing margins and growth in its loan disbursement. Its net losses plunged 49 percent YoY to Rs 292 crore. The Noida-based company's ESOP expenses for the quarter stood at Rs 385 crore.

Also Read | Paytm lays off over 1000 employees as firm implements AI automation tech

On December 22, Paytm shares ended half a percent higher at Rs 641.90 on the National Stock Exchange. So far this year, Paytm stock has risen around 20 percent, slightly outperforming benchmark Nifty 50 which has rallied 17 percent during this period.

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