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Coronavirus pandemic | Swiggy lays off 1,100 employees; scales down cloud kitchen business

The layoffs come two days after rival Zomato let go of around 500 people.

May 18, 2020 / 02:26 PM IST

Bengaluru-based food delivery major Swiggy will lay off 1,100 employees and shut down some of its businesses, the company’s co-founder Sriharsha Majety said on May 18, as the coronavirus continues to take its toll.

Majety blog post comes two days after Gurugram-based rival Zomato announced a plan to let go of around 500 employees and cut by up to 50 percent the salary of the remaining staff for the next six months.

“We, unfortunately, have to part ways with 1,100 of our employees spanning across grades and functions in the cities and head office over the next few days,” said Majety in a blog that was sent out as an email to employees.

Besides the core delivery business, the cloud kitchen segment, too, was badly hit, he said.

ALSO READ: Zomato to lay off 13% workforce, up to 50% salary cuts for rest

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The company has been closing down many of its kitchens, depending on its profitability profile to save cash. The company would continue to optimise staffing and physical operations as the business has been down since the lockdown.


“We also need to build a much leaner organisation 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,” Majety said.


Swiggy has offered the retrenched employees salaries for three months. For every year spent by the employee, they will be paid an additional month’s salary.


The company will also offer vesting of employee stock options to the nearest quarter, doing away with the year-long vesting period.


The company shared a plan to continue medical support for a specific

period, access to free learning on Linkedin for upskilling and allowed the staff to retain office laptops and communication allowance for the next three months.


Swiggy’s plan to cut down on the cloud-kitchen business has been known for a while.


Moneycontrol recently wrote that multiple restaurant partners were receiving messages from Swiggy to collect their kitchen utensils as soon as the lockdown was over.


News reports had also talked about Swiggy letting go of around 1,000

employees due to business restructuring for a post-coronavirus world.


Just before the COVID-19 outbreak forced the country into lockdown, the company had raised $156 million, valued at around $3.5 billion.

The company is backed by investors like Naspers, Tencent, Ark Impact, Accel Partners among others.


The funds had put the company in a strong position but given the uncertainty around the outbreak, it would need to conserve cash, which was they were going ahead with the downsizing, Majety said.


As the coronavirus infections near the 100,000-mark, the country began two-week long Phase Four of the lockdown on May 18.


The two-month shut down has dealt a blow to the food delivery business, with order volumes down to almost half across cities.


Swiggy, which was founded in 2014, works with 1.6 lakh restaurants and is available at more than 500 locations.


To utilise its delivery fleet, Swiggy has moved into grocery, package and parcel deliveries within cities and some other related business opportunities.
Pratik Bhakta
first published: May 18, 2020 12:30 pm
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