Layoffs based on non-performance and AI automation have been ongoing at the company for the past month.
Fintech giant Paytm has trimmed its workforce, letting go of over 1000 employees in the operations, sales, and engineering teams following the implementation of various AI technologies aimed at enhancing efficiency.
A spokesperson from Paytm stated, “We are streamlining our operations through AI-powered automation to boost efficiency, removing repetitive tasks and roles to optimize growth and costs, resulting in a modest reduction in our workforce in operations and marketing. The integration of AI has exceeded our expectations, leading to a 10-15% reduction in employee costs. Additionally, we consistently assess instances of non-performance throughout the year.”
Regarding future plans, the spokesperson mentioned, “Insurance and Wealth will be a logical expansion of our platform, in continuation of our focus on existing businesses. Having demonstrated the strength of our distribution-based business model in loan distribution, we are extending the same focus to new businesses to drive scale.”
Sources revealed that the layoffs primarily affected the lending team. An industry insider shared, “While their lending business remains robust, the team size within that segment constituted more than 30% of the total employees. They recently discontinued small-ticket loans and BNPL services, facing pressure to cut costs.”
Paytm, on December 7th, announced a slowdown in its small-ticket postpaid loans while emphasizing the expansion of high-ticket personal loans and merchant loans. This decision prompted brokerages to revise down their revenue estimates for the company.
Despite the company’s projection that postpaid loans could decrease by half, it assured that it would not adversely affect margins or revenue. Paytm clarified that postpaid had the lowest take rate, resulting in a minimal impact on revenue.
One97 Communications, the parent company of Paytm, reported a consolidated revenue of Rs 2,519 crore for the second quarter ended September 2023, marking a 32% increase from the previous year. The company’s losses in Q2 of FY24 were Rs 292 crore, an improvement from Rs 571 crore in Q2 of FY23.
During the same quarter, Paytm recorded ESOP expenses of Rs 385 crore.