Food delivery major Swiggy is laying off 380 employees across product, operations and engineering teams, according to a company-wide email sent by CEO Sriharsha Majety.
“We are implementing a very difficult decision to reduce the size of our team as 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,” Majety wrote. businessline has reviewed the email.
He cited challenging macroeconomic conditions and overhiring in 2021 as the primary reason for team rationalisation. “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,” Majety added.
He also noted that while Swiggy has cash reserves to weather harsh circumstances, the company cannot make this a crutch and must continue identifying efficiencies to secure Swiggy in the long-term.
Further, Swiggy’s growth rate for food delivery has slowed down versus the company’s projections, said Majety. This meant that the company needed to revisit its overall indirect costs to hit profitability goals. While Swiggy had already initiated actions on other indirect costs like infrastructure, office/facilities, etc, they now needed to right-size its overall personnel costs also inline with the projections for the future.
“Our overhiring is a case of poor judgement, and I should’ve done better here,” Majety added. The company has also identified many areas for improvement in its pace of execution. Operating in multiple hyper-competitive categories meant that the company had very little room to slow down and so now they want to arrive at a more deliberate org design to be more nimble, effective, and efficient at the same time.
“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,” he added.
Employee Assistance Plan
The company has setup an Employee Assistance Plan for the impacted employees, wearing they are being offered a cash payout between 3-6 months based on their tenure and grade. The laid off employees will receive either an assured three months pay or Notice period + 15 days ex-gratia for every completed year of service + balance earned leave as per policy whichever is higher. All impacted employees will get a minimum assured payout of 3 months.
The company has also waived off the annual vesting cliff and will be extending vesting to the nearest quarter from the last working date. These employees will also be eligible to participate in the ESOP liquidity program slated for July 2023. Additionally, these employees will receive medical insurance cover for them and nominated family members till 31st May, 2023.
Swiggy is also offering career transition support to the impacted employees for the next three months. Further, they will get continued access to LinkedIn learning, and Swiggy’s wellness portal till March 31 , 2023. Employees, who relocated in the last one year will have their relocation expenses reimbursed if they choose to relocate to their previous location or permanent address. They will also be able to retain their allocated work laptops to help them continue their job search.