ANOTHER SIGN OF ECONOMIC SLOWDOWN? ZOMATO SACKS EMPLOYEES

BUSINESS, NEWS

In a bid to reduce ‘redundancy’, Foodtech Goliath Zomato has sacked 1% of their workforce earlier this month. On the 9th of August, the company decided to let go of 60 employees mainly from customer support department of their Gurugram office.

The company issued a statement explaining their motive behind this move. “Over the last few months, our service quality has improved, and the percentage of orders requiring support has come down significantly creating redundancies for about one percent (60 people) of our workforce. Most of these redundancies are in customer support department and also include movements to other departments as part of our Internal Job Placement exercise.”
The company further explained that expansion into more than 500 cities across India led to addition of more than 2000 people into the company’s workplace. This expansion however needs to be constantly realigned to new departments. Zomato further justified the lay offs saying use of new technology also results in further redundancies.
However there is no clarity if these 60 employees were sacked immediately along with a severance pay or if they were asked to serve their notice period.
Reports suggest that for every order Zomato spends up to Rs 5 for customer support & with high orders coming in the costs of customer support were high. In its annual report, the company cited delivery operations as the driving force for its loss. The company is now trying to automate its customer support to cut the human cost & enchance customer service.
Sustainable Growth?
This however isn’t the first time the company has sacked its employees. In the year of 2015, the company had to let go of at least 300 employees, majority of them from United States.
But in 2019, the company is facing crisis of a different kind. If the ‘Food has no religion’ hurt it’s image on social media and drew flak from Right Wing Groups, the Infinity package offered to it’s Flagship Gold Users has dented it’s prospects with Restaurant Association. Several restaurants opposed the idea, leading to a standoff despite several rounds of talks.
Consultancy firm, Market Research Future predicts that at a growth rate of 16%, Online Food Markets could become 17 billion dollar industry by 2023. Companies like Zomato & Swiggy clock in 70 million orders per month approximately. But what remains to be seen is, can these food Giants sustain their own success story in the future.