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Paytm’s parent company, One97 Communications, is reportedly planning significant job cuts amid financial challenges. The company may reduce its workforce by 15-20%, which translates to around 5,000-6,300 employees, in an effort to reduce employee costs by ₹400-500 crore this fiscal year, according to a report by the Financial Express.
In FY23, One97 Communications had an average of 32,798 employees on payroll, with 29,503 actively working. For FY24, the total employee costs have surged by 34% year-on-year to ₹3,124 crore. The cost-cutting measures have already started, with over 1,000 employees terminated in December as part of the company’s strategy to streamline operations and manage expenses.
Paytm’s financial performance in the January-March quarter highlighted the company’s ongoing struggles. The net loss for this period was ₹550 crore, a significant increase from the ₹168 crore loss reported in the same quarter the previous year. Additionally, the company’s revenue from operations fell by 3% year-on-year to ₹2,267 crore. This decline in revenue is partly attributed to the Reserve Bank of India’s (RBI) restrictions on Paytm Payments Bank.
Vijay Shekhar Sharma, CEO of Paytm, acknowledged the impact of the RBI’s regulatory actions on the company’s revenue and profitability. He expressed a commitment to compliance and resilience, stating, “We learned a lot of our lessons to become better and resilient. We also resolved to be fully compliant according to the regulator’s expectations in letter and spirit.”
The planned layoffs are part of Paytm’s broader strategy to navigate its financial challenges and improve its profitability. As the company aims to cut costs and optimize its operations, the reduction in workforce is seen as a necessary step to achieve these goals.
The situation underscores the broader challenges facing fintech companies in India, as they navigate regulatory pressures and strive for sustainable growth. Paytm’s future will depend on its ability to adapt to these challenges and maintain compliance with regulatory standards while continuing to innovate and expand its services.
Sources By Agencies
