One 97 Communications, the parent company of Paytm, has reportedly laid off over 1,000 employees across multiple units in recent months. This move is seen as a cost-cutting measure as the company undergoes realignment in various business segments. The job cuts, which amount to at least 10% of the overall workforce, follow Paytm’s withdrawal from small-ticket consumer lending and the ‘buy now pay later’ segment, prompted by regulatory measures by the Reserve Bank of India (RBI) against unsecured loans.
The significant layoffs are considered among the most substantial implemented by an Indian tech company in 2023. The majority of the job losses are reported to be in Paytm’s lending business, which experienced significant expansion over the past year. Paytm had been offering loans under Rs 50,000 through Paytm Postpaid. However, with the changing regulatory landscape, the company is now focusing on aggressive expansion into wealth management and insurance broking.
On December 7, Paytm’s stock faced a 20% drop, hitting the lower circuit, after the company announced its decision to exit the Paytm Postpaid segment and adopt a cautious approach toward small-ticket loans in the future.
In response to an inquiry from Economic Times, a Paytm spokesperson contested the reported number of job cuts but acknowledged the layoffs. The company emphasized its intention to save 10-15% of staff costs during the current fiscal year. The spokesperson mentioned that many of the affected roles have been replaced by AI-led automation, particularly in operations and marketing, with the core business of payment expected to see a manpower increase of 15,000 in the coming year.
The spokesperson stated, “We are transforming our operations with AI-powered automation, eliminating repetitive tasks and roles to drive efficiency across growth and costs, resulting in a slight reduction in our workforce within operations and marketing.”
Furthermore, the company aims to achieve the targeted 10-15% reduction in employee costs by the end of the fiscal year. The layoffs have affected employees across various departments, including payments, lending, operations, and sales.
It’s notable that these developments come as Paytm navigates changes in its business strategy and faces challenges posed by regulatory shifts, necessitating a shift in focus and operations to align with the evolving financial landscape in India.
