Online money transaction & payment app, Paytm's parent company One 97 Communications fired 1000 employees just weeks before Christmas 2023 and New Year. The last month of the year which is supposed to bring joy in everyone's life brought pain and financial burden as 1000 employees were laid off by Paytm. In the Paytm firing, employees who handled operations, and sales, and who were part of the engineering team were handed pink slips. A report suggests that the latest Paytm Layoffs will impact 10 percent of the company's overall workforce. Paytm fired employees included people in the small-ticket consumer lending and the 'buy now pay later' segment due to regulatory restrictions on unsecured loans by the Reserve Bank of India (RBI). Now, the question arises why did Paytm fire 1000 employees just weeks before Christmas and New Year?
The answer is Artificial Intelligence (AI). As per reports, the company has introduced AI into its multiple workings. Before the introduction of AI, employees used to handle such processes, however, after the including of AI, 1000 people had to lose their jobs weeks before holidays.
Apart from AI, it is also reported that due to RBI's latest guidelines on unsecured loans, Paytm had to fire many employees who were working in a similar department so that they could cut the cost and keep the company running.
A Paytm spokesperson was quoted by a financial news portal saying that the company has included AI and working efficiency has been increased by at least 15 percent. "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. 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, " Paytm's spokesperson was quoted saying.
"Insurance and Wealth will be a logical expansion of our platform, in continuation of our focus on the existing businesses. Having shown the strength of our distribution-based business model in loan distribution, we are expanding the same to focus on new businesses to drive scale, "The Paytm spokesperson added.
It is worth mentioning that the a source was quoted saying that Paytm went through over hiring and therefore, the new age company fired 1000 of employees. "Their lending business is going very strong, however the team size they employed within was more than 30% of the total employees. They recently shut down small-ticket loans and BNPL services. There is pressure to cut costs," the source was quoted saying.
Talking about Paytm's revenue, One97 Communications on October 20 reported a consolidated revenue of Rs 2,519 crore, up 32 percent for the second quarter ended September 2023 as against a revenue of Rs 1,914 crore last year. However, the company’s losses were recorded at Rs 292 crore in Q2 of FY24 as against a loss of Rs 571 crore in Q2 of FY23.