One quick thing: Leadership churn continues at Tata Digital as it loses two more top-level executives.

In today’s newsletter:

• Paytm crisis aftermath 
• ONDC clocks fresh high 
• Gen AI: Accenture beats Indian IT hands down

Also, Women dominated the 66th annual Grammy Awards today. One artist in particular created history. Scroll below for more deets!

Was this newsletter forwarded to you? You can sign up for Tech3 here

"We are not completely sure of things…like what exactly went wrong. But we will figure out everything soon" 

This was Paytm founder Vijay Shekhar Sharma trying to placate concerned employees during the company's first townhall since the crisis started last week.

Fresh fears of job cuts have been floating around the firm since RBI’s circular on January 31, which effectively restricted them from offering almost all major banking services. 

• This comes after Paytm laid off over 1,000 employees in December 2023. 

Sharma however assured that there will be no layoffs as the company continues to engage with RBI and work with other banks for partnership.

Employees told us about the ongoing stress, and closed door meetings with team heads to collate data and cut miscommunication among people. Read the story.

Paytm has also initiated talks with other banks to move all Paytm Payment Bank's accounts and keep its services afloat. But, it seems like this will be a tough one.

At least half a dozen public and private sector bank executives that we spoke with, seemed hesitant to take up the business.

• Top bankers see this as a liability after RBI flagged compliance and supervisory lapses. New accounts will have to be opened with fresh KYCs, a lot of painstaking for zero-fee UPI business. 

• Banks will take up the project only if it comes as a request from RBI and NPCI, two senior bankers told us.

Read our story

Meanwhile, Paytm’s stock continues to be in free fall, hitting the lower circuit for the third consecutive day. Paytm’s shares have dropped over 42% in the last three sessions.

• Banking Central | Did the Paytm Bank Board fail to do its duties?

• RBI’s action against Paytm hurts Buy-Now-Pay-Later ecosystem

• No law agency probe into Paytm as of now, says revenue secretary

Open Network for Digital Commerce (ONDC), the Indian government’s attempt to thwart e-commerce monopolies, has made a strong start in 2024.

The government-backed network has clocked a fresh monthly high of 6.5 million transactions across retail and ride-hailing categories.

• The number saw a 18% monthly growth from 5.5 million transactions in December.

January 2024 was also the first month when the retail category on ONDC saw 3 million transactions, or an average of 1 lakh daily transactions.

• ONDC managed to clock over 1 lakh retail transactions per day for 16 days on the trot, sources tell us.

The current share of retail purchases — which is 46% of the total monthly transactions — stands in stark contrast to early 2023.

• A year back, retail accounted for only 5-10 percent, while the mobility category dominated with 90-95 percent of all ONDC transactions

For ONDC to achieve its goal of making e-commerce interoperable for small merchants, and free from the clutches of a few large platforms, the retail segment has to grow much bigger.

One way ONDC is attempting to grow quicker is by bringing aboard newer ecommerce categories.

• While 90% of retail purchases were in food delivery a few months back, the category accounts for only 35% of orders placed now

Categories such as fashion, electronics, beauty and home essentials are taking off on ONDC as big brands and small merchants from such categories come on board, sources tell us.

Meanwhile, ONDC also wants users and merchants on the network to avail easy credit for their transactions. 

• To that effect, it piloted a couple of personal loan disbursals in January

Dig deeper

Generative AI, which has captured the attention of the global technology industry, doesn’t appear to be translating into business volumes for India’s top IT services companies

Global rival Accenture, however, seems to already have an edge.

According to data accessed by us from UnearthInsight:

•  The top 10 Indian IT companies together have around 450 Gen AI projects and a deal pipeline estimated to be of $150-250 million.
•  This is a stark contrast from Accenture’s $450 million worth of deal pipeline with 450 projects and PoCs. 

Indian IT companies didn’t report any additional volumes or numbers around generative AI deals in the third quarter ended December 31.

To be sure, Accenture may seem to have a lead as of now, it is still too early to declare a clear winner, analysts say. 

But as compared to Indian rivals, the IT service giant has a few more tricks up its sleeves.

• For instance, given its size and scale, the firm has invested in 50,000 Microsoft Co-Pilot licences, while the top four Indian IT firms have barely invested in a few hundred licences apiece.
• Accenture also has mature datasets and analytics practice that helps identify potential clients with generative AI adoption readiness. 

 Find out more

• US police departments are turning to AI to sift through millions of hours of unreviewed body-cam footage to identify problematic officers and patterns of behavior.

• Microsoft is working with media startup Semafor to use its artificial intelligence chatbot to help develop news stories.

• Google's AI chatbot Bard could be rebranded as Gemini with plans to launch a new "Advanced" tier and a dedicated Android app

Always be selling 

It appears that Taylor Swift has fully embraced this mantra and perfected the art of marketing her work.

While accepting a Grammy for Best Pop Vocal Album - her 13th Grammy (Swift's lucky number) - she announced a new album "The Tortured Poets Department," that will be released in two months. Watch her speech 

• Later in the ceremony, Swift made history by winning the Grammys’ top prize, Album of the Year, for a record-breaking fourth time, surpassing male legends such as Frank Sinatra, Stevie Wonder and Paul Simon. 

Indian artists also made a splash at the award ceremony with the tabla maestro Zakir Hussain scoring a hat-trick and flautist Rakesh Chaurasia notching up two wins.

Check the full list of winners