Swiggy fires 380 employees, CEO apologizes and says company overhired
Swiggy has announced that it is firing 380 employees as part of its latest layoff process. The company has sent an email to the impacted employees to inform them about its plan to sack hundreds of workers. The food delivery company's CEO Sriharsha Majety has given several reasons for the layoff and apologized for the decision that Swiggy has taken to reduce headcounts.
"We’re implementing a very difficult decision to reduce the size of our team as a part of a restructuring exercise. In this process, we will be bidding goodbye to 380 talented Swiggsters. This has been an extremely difficult decision taken after exploring all available options, and I’m extremely sorry to all of you for having to go through with this," the company's CEO said.
Why is Swiggy firing hundreds of employees?
One of the major reasons that Swiggy has mentioned is the challenging macroeconomic conditions that it is facing. The company revealed that the growth rate for food delivery has slowed down, which has resulted in lower profits and reduced income. Though, Swiggy is saying that it has enough cash reserves to sustain itself. The executive has also blamed "overhiring" for its decision to lay off people.
"Over the last year, under challenging macroeconomic conditions, companies around the world (public and private ) are adjusting to the new normal, with refreshed investment horizons and accelerated timelines for profitability. We’re no exception here, and have already advanced our own timelines for profitability on food delivery and Instamart. While our cash reserves allow us to be fundamentally well positioned to weather harsh circumstances, we cannot make this a crutch and must continue identifying efficiencies to secure our longterm," the CEO said.
The CEO also explained that the growth rate for food delivery has slowed down, which is totally against the company's projections. So, the company had to revisit our overall indirect costs to hit our profitability goals.
"While we’d already initiated actions on other indirect costs like infrastructure, office/facilities, etc, we needed to right-size our overall personnel costs also in line with the projections for the future," he said. The executive also blamed the company's "poor judgment" for "overhiring" and said that he "should’ve done better here."
The company is saying that it will offer cash payout to impacted employees between 3-6 months. It will be based on their tenure and grade. People will receive either an assured three-month pay, 15 days of ex-gratia for every completed year of service, and a balance of earned leave too. Swiggy will at least offer 3 months of payment to all the affected ones and this includes variable pay or incentives.
"The joining bonus and retention bonus will also be paid out will also be waived off. The annual vesting cliff has been waived off. We will be extending vesting to the nearest quarter from the last working date. They will also be eligible to participate in the ESOP liquidity program slated for July 2023," Swiggy said.
The other benefits include medical insurance cover till May 2023, career transition support for the next three months, and continued access to LinkedIn learning as well as wellness portal till March this year. Swiggy also asserted that those who relocated in the last one year will have their relocation expenses reimbursed if the employees choose to relocate to their previous location or permanent address. One will also be able to retain their allocated work laptops to continue their job search.
Swiggy is shutting its Meat marketplace
Swiggy also plans to shut down its Meat marketplace as the company didn't hit product market fit in this area despite its iterations. But, the company will continue to offer meat delivery through Instamart.
"While we continue to be fully committed to exploring new business opportunities, we have also taken a harder look at some of our existing new verticals. Effective very soon, we will be shutting down our Meat marketplace. While the team has done exceptionally well with solid inputs, we haven’t hit product market fit here despite our iterations. From a customer perspective, we will still continue to offer meat delivery through Instamart. We will continue to stay invested in all other new verticals," the CEO said in the email.