Swiggy, India’s biggest food delivery startup, is laying off 1,100 workers as the coronavirus pandemic takes an economic toll on businesses across the globe.
Sriharsha Majety, chief executive officer and co-founder of Swiggy, said in a Monday (May 18) email to employees that it’s with a “heavy heart” that he announces scaled-back operations and layoffs.
“… today is one of the saddest days for Swiggy as we have to go through an unfortunate downsizing exercise. With a heavy heart, I have tried to share the reasons and details of the process … because you deserve to know,” he said.
He said that despite recent funding and Swiggy’s “accelerated path to profitability for the food delivery business last December” the coronavirus is forcing the startup to be more efficient and “look even harder at our cost base.”
He added that cutting Swiggy’s workforce “is easily the hardest and longest deliberated decision the management team and I have been faced with over recent times.” He also said that the layoffs have nothing to do with employees’ performance.
The backbone of its business — food delivery — is expected to flourish again but is now stalled, he said. Right now the company has to “prepare for worse scenarios” and ensure it can survive despite uncertainties.
In addition to workforce reductions, Swiggy will scale down or shutter adjacent businesses that are “highly volatile” or will not be especially “relevant for the next 18 months.” Cloud kitchens will continue to be scaled down and some will close for good.
“While this crisis has impacted our core business negatively, there is no doubt that we are now at an inflection point for the penetration of digital commerce and home delivery in India,” he said.
The company will invest in grocery delivery and other service offerings that are doing well and are expected to remain popular. It is also going to pinpoint and get rid of unnecessary expenses, like office infrastructure.
“We’ve all done some of the greatest work of our time at Swiggy over the last few weeks working remotely, and that’s reason enough to believe this can be done,” he said. “Without the key contributions of every Swiggster, we wouldn’t have achieved all that we have.”
All employees being laid off will get a minimum of three months’ salary, regardless of how long they were with the company. People with Swiggy longer than three months will get up to eight months’ pay.
The company is also extending its employee stock ownership plan (ESOP) vesting “to the nearest quarter (including the months of notice period) and waive off the 1-year cliff for those who have not completed 1 year.”
Medical insurance will continue for employees and family members, including parents, through Dec. 31. There will also be a Wellness Assistance Program “to ensure the physical, emotional/mental and financial well-being of impacted employees and their families.” Career transition assistance and support will also be offered for three months.
In addition, employees being laid off will get to keep their work laptops and will have mobile phone coverage at no charge for three months. Free LinkedIn Learning will also be offered for three months.
Swiggy closed 2019 with more expenses than usual as it worked on expansion plans to keep up with competitors. The company’s expenses went up four times more than in 2018.