In a recent development, Paytm, the popular digital payment platform, faced a significant shakeup with over 1,000 employees being laid off. Most probably Paytm layoffs its employees because of AI. This move by One 97 Communications, Paytm’s parent company, aims to cut costs and reorganize its different businesses.
The Paytm Layoffs Unveiled
Paytm’s parent company, One 97 Communications, has reportedly let go of over 1,000 employees across various units. According to sources cited by an ET report, this decision is part of a cost-cutting strategy and a realignment of business priorities.
Impact on Paytm’s Workforce
This move is expected to affect around 10% of Paytm’s workforce, making it one of the most significant job cuts in the Indian tech industry this year. The Paytm layoffs discontinued its involvement in small-ticket consumer lending and the ‘buy now pay later’ segment due to regulatory constraints imposed by the Reserve Bank of India (RBI).
Larger Trend in New Economy Sector
Unfortunately, Paytm is not alone in facing workforce challenges. New economy companies in India have already let go of over 28,000 employees in the first three quarters of this year, reflecting the funding challenges that have impacted loss-making enterprises. Paytm layoffs contribute to this trend as the company grapples with changing market conditions.
Focus Shift in Paytm’s Business
The majority of the job losses are anticipated to be in Paytm’s lending business, particularly impacting Paytm Postpaid, which provided loans under Rs 50,000. Due to regulatory changes, Paytm is now redirecting its focus towards wealth management and insurance broking.
Reactions and Future Plans
Following the announcement, Paytm’s stock took a hit, dropping by 20% on December 7. While a Paytm spokesperson disputed the exact number of layoffs, they confirmed the downsizing. The company aims to save 10-15% of staff costs this fiscal year, with some roles being replaced by AI-led automation. Paytm plans to hire fresh talent for its wealth management and insurance distribution business, anticipating an increase in staff for its core payments business.
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These unexpected layoffs have affected various departments within Paytm, with performance issues cited as the primary reason. As the company strives for profitability, it’s actively working on new wealth management and insurance distribution products. While the job cuts are challenging, Paytm remains optimistic about its future, focusing on reshaping its workforce to align with evolving business priorities.