Zomato, An India-based food delivery startup cuts 13% of its workforce to cut costs and deal with the coronavirus crises that have made many cautious about ordering food online.
The 11-year-old company didn't announce the exact number of people who let it go, but the number is over 500. A Zomato spokesman told theinformationsuperhighway that the startup employs approximately 4,000 people and the layoff affects its workforce worldwide. (Zomato offers its food discovery and verification service in dozens of markets.)
Zomato, which fired around 540 employees from its customer team in September last year, said it would provide half of their salary to those affected for six months or until they find another job, whichever comes first. The startup announced that employees who were hired by recruitment agencies and were not on the salary list would receive a severance payment of two months.
Deepinder Goyal, Zomato, co-founder and CEO of the Gurgaon-based company, said Zomato was "severely affected by the COVID locks". India issued a nationwide ban at the end of March that still exists to prevent the outbreak of the infectious disease.
“A large number of restaurants have already closed permanently, and we know that this is just the tip of the iceberg. I expect the number of restaurants to shrink by 25-40% in the next 6-12 months. What actually happens, for better or worse, is everyone's guess, ”he wrote in a blog post.
Goyal also suggested a cut in salaries across the company. “As of June, I propose a temporary wage cut for the entire organization. Lower cuts are proposed for people with lower salaries and higher cuts (up to 50%) for people with higher salaries, ”he said, adding that several people had already volunteered to waive their entire salary for six months .
Today's announcement follows a similar move from Swiggy. India's largest food delivery startup that cut some 1,000 jobs last month. Both startups are currently processing fewer than a million orders on their platforms, compared to nearly 3 million that they had processed before the outbreak when people reduced their exposure to the world.
To make up for the loss, both have also expanded their business. Zomato, which recently started delivering food, said it now serves this category in 185 cities in India and plans to launch this offering in the United Arab Emirates and Lebanon.
Zomato, which raised $ 150 million from Ant Financial in January, was in talks to raise another $ 350 million. In a previous email exchange with theinformationsuperhighway, Goyal said he expects the round to be completed by mid-May. Uber sold its Indian grocery store to Zomato earlier this year.
Some industries, particularly the travel and hospitality industries, are severely affected as people follow New Delhi 's order to stay at home. Oyo, a $ 10 billion startup, announced last month that it has taken thousands of employees on vacation in the United States and several other markets for up to three months, as sales have gone up in the past few months has dropped more than 60%.
Ixigo, a 13-year-old travel and hotel booking service, said in late April that he had cut all of his staff's salary. MakeMyTrip, another travel and stay booking service, announced in the same month that it was also lowering its top management salary across the company. This week, MakeMyTrip announced that it would enter the grocery delivery business.