2023 has been a forgettable year for India’s startup ecosystem, and it continues to bring in bad news until the very end.
Paytm has fired 1,000 employees across divisions, ET reports. The bulk of the job losses are in Paytm’s lending business, which was hit by regulatory hurdles earlier this month. The layoffs represent 10 percent of Paytm’s overall headcount. A Paytm spokesperson acknowledged the layoffs, but disputed the number of fired employees. The layoff is among the steepest across India’s startup landscape this year.
Paytm said that the layoffs were caused by the company transforming its operations through AI. “We are transforming our operations with AI-powered automation to drive efficiency, eliminating repetitive tasks and roles to drive efficiency across growth and costs, resulting in a slight reduction in our workforce in operations and marketing,” a Paytm spokesperson said. “We will be able to save 10-15% in employee costs as AI has delivered more than we expected it to. Additionally, we constantly evaluate cases of non-performance throughout the year,” they added.
The layoffs come weeks after Paytm had trimmed its Buy Now, Pay Later (BNPL) business following regulatory directives from the RBI. Paytm said it would scale back on loans worth less than Rs. 50,000, and instead expand into higher ticket size loans. Paytm said that its postpaid loans could fall to half from the move, and its stock had fallen 20 percent the day it had made the announcement. It appears that this reduction in scale in lending could be a major cause of the layoffs, which have largely occurred in the company’s lending vertical.
Paytm isn’t the only startup to have laid off employees this year. As per a Longhouse consulting report, as many as 28,000 employees had been fired by startups in the first nine months of 2023 by names including Byju’s, Jiomart, Dunzo and Amazon. And with the tech sector continuing to cull employees till the very end of the year, 2023 looks poised to go down as one of the most difficult years in recent memory for Indian startups.