Zomato lays off 600 customer support employees without prior notice

Zomato has reportedly laid off approximately 600 customer support associates within a year of hiring them. The move comes as the food and grocery delivery company faces slowing growth in its core food delivery segment and increasing losses in its quick commerce division, Blinkit.

The company has been actively incorporating artificial intelligence (AI) into its customer support operations in a bid to reduce costs. In line with this strategy, Zomato recently launched Nugget, an AI-powered customer support platform that currently handles over 15 million support interactions per month for Zomato, Blinkit, and Hyperpure.

A significant portion of the layoffs impacted employees hired under Zomato’s Associate Accelerator Programme (ZAAP). The programme, introduced a year ago, recruited 1,500 employees in customer support roles, offering the opportunity to transition into senior positions within a year. However, the majority of these contractual workers were not offered renewals at the end of their tenures.

Several former and current employees claimed they were dismissed without prior notice and were provided only a month’s salary as compensation. Reasons cited for termination included poor performance and punctuality. The layoffs come amid a slowdown in consumption affecting Zomato’s core food delivery business. The company has also struggled to scale operations beyond the top eight cities, according to previous reports.

In a statement to Moneycontrol, one of the current customer support associates who did not want to be identified said, “A majority of employees hired under Zomato’s ZAAP program last year have been let go over the last week or so without any clear explanation. This has taken place across their offices in Gurugram and Hyderabad. The atmosphere has become really tense.”

Additionally, Blinkit, Zomato’s quick commerce vertical, has been incurring growing losses as the company aggressively expands in a highly competitive market.

Zomato’s last significant round of layoffs occurred in December 2022, when it dismissed approximately 100 employees, about four per cent of its workforce, across product, technology, catalogue, and marketing functions.

The company has also experienced a series of high-profile executive departures in recent years. In September 2023, co-founder and chief people officer Akriti Chopra resigned. This followed the exits of former chief technology officer Gunjan Patidar in January 2023, co-founder Mohit Gupta, former food delivery chief Rahul Ganjoo, and Intercity Legends service head Siddharth Jhawar.

For the third quarter (Q3) of the financial year 2024-25 (FY25), Zomato reported a 57 per cent year-on-year decline in profit after tax (PAT) to Rs 59 crore, down from Rs 138 crore in the corresponding quarter of the previous year. The company had reported a PAT of Rs 176 crore in the second quarter (Q2) of FY25.

However, Zomato’s revenue from operations grew by 64 per cent year-on-year to Rs 5,404 crore in Q3 FY25, compared with Rs 3,288 crore a year earlier. This marked an increase from the Rs 4,799 crore reported in the previous quarter.

With its focus on automation and AI-driven customer support, Zomato is restructuring operations to mitigate financial pressures. However, the recent layoffs have raised concerns about job security and workplace conditions, particularly for contractual employees.

As Zomato continues to navigate economic uncertainties and rising competition in quick commerce, its strategy of balancing automation with human resources will be closely watched by industry analysts and stakeholders.