Zomato Lays Off 600 Employees Amid Losses and Automation Push

In a strategic move to address mounting losses and optimize operations, Zomato has laid off around 600 employees, primarily from its food delivery segment and Blinkit, its quick commerce subsidiary. This move is part of the company's broader efforts to cope with slowing growth in its core food delivery business and increasing competition in the quick commerce market.

Zomato has also ramped up investments in artificial intelligence (AI), particularly to enhance its customer support functions. The company's recent launch of Nugget, an AI-powered platform, is aimed at automating support tasks, allowing the company to scale while cutting costs. Nugget currently manages over 15 million customer interactions per month across Zomato, Blinkit, and Hyperpure.

The layoffs affect several employees from Zomato's Zomato Associate Accelerator Program (ZAAP), a customer support initiative rolled out last year. The program, which recruited about 1,500 employees, was designed to provide workers with opportunities across various business functions, including sales, operations, supply chain, and program management. However, many of these contractual workers found their contracts not renewed after their tenure, with some being offered only one month's salary as compensation. Reports suggest that terminations occurred with little warning, often attributed to reasons such as poor performance and punctuality.

Zomato has faced significant challenges, including a slowdown in its food delivery division, which has struggled to expand beyond major cities, and Blinkit’s increasing losses due to aggressive expansion and rising competition in the quick commerce industry. The company's overall profitability has been impacted, with a notable 57% year-on-year decline in quarterly profit after tax (PAT) for Q3 FY25, amounting to Rs 59 crore, down from Rs 138 crore in the same quarter of the previous year.

Despite this, Zomato's revenue from operations surged by 64% year-on-year, reaching Rs 5,404 crore in Q3, compared to Rs 3,288 crore in the previous year. This indicates that while the company is still growing in terms of revenue, its efforts to achieve profitability remain a significant challenge.

In December 2022, Zomato had already let go of 100 employees, approximately 4% of its workforce, focusing on product, technology, catalogue, and marketing divisions.