Paytm lays off over 1000 employees as firm implements AI automation tech

Paytm lays off over 1000 employees as firm implements AI automation tech

The company has recently initiated a series of layoffs primarily attributed to non-performance and the integration of AI-driven automation into its operations, resulting in a reduction in workforce across various departments including operations, sales, and engineering.

Paytm, in 2021, took the decision to release 500 to 700 employees based on non-performance. However, in a more recent development, the fintech major has laid off over 1000 employees across operations, sales, and engineering divisions subsequent to the implementation of AI technologies aimed at enhancing efficiency.

The company’s spokesperson shared insights into the restructuring efforts, emphasizing their commitment to leveraging AI-powered automation for operational enhancement. They highlighted the elimination of repetitive tasks and roles to drive efficiency while acknowledging a slight reduction in the workforce within operations and marketing. This transformation is anticipated to save 10-15% in employee costs, exceeding the initial expectations of the company. Additionally, the spokesperson mentioned their ongoing assessment of non-performance cases throughout the year.

Addressing the company’s strategic focus, the spokesperson mentioned plans for expansion into insurance and wealth domains, building upon existing businesses. Following the success of their distribution-based business model in loan distribution, the company intends to apply a similar approach to drive the growth of new businesses.

Reports from Economic Times highlighted the recent layoffs, specifying their association with the lending team. Industry insiders indicated that although the lending business was performing well, the team’s size accounted for over 30% of the total workforce. Recent decisions to discontinue small-ticket loans and Buy Now Pay Later (BNPL) services were observed as cost-cutting measures due to market pressures.

Furthermore, the company announced intentions to decelerate small-ticket postpaid loans while focusing on expanding high-ticket personal loans and merchant loans. This strategic shift prompted concerns among brokerages, resulting in adjustments to revenue estimates for the company.

During the company’s analyst meeting, it was revealed that the reduction in postpaid loans might not significantly impact margins or revenue. Considering postpaid loans’ minimal revenue impact due to lower take rates, the company aimed to maintain stable margins despite the strategic alteration.

One97 Communications, the parent company of Paytm, reported a consolidated revenue increase to Rs 2,519 crore for the second quarter of September 2023, marking a 32% growth from the previous year. Improved payment processing margins and loan disbursement contributed to this growth, despite recording losses of Rs 292 crore in the same quarter.

The company’s ESOP expenses for the quarter were reported at Rs 385 crore in Q2. This dynamic financial performance reflects the ongoing evolution and strategic shifts within the company’s operational landscape.


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