Implements AI Automation; Paytm Lays Off Over 1000 Employees
Utilizing cutting-edge artificial intelligence (AI) technology, Paytm, a leading fintech firm, has strategically downsized its workforce by more than 1,000 employees, predominantly from its operations, sales, and engineering sectors. This decision aligns with the company’s recent initiative to implement AI-driven automation, revolutionizing its business processes. In essence, Paytm lays off over 1000 employees to streamline and enhance efficiency through technological advancements.
“We are transforming our operations with AI-powered automation to drive efficiency, eliminating repetitive tasks and roles to drive efficiency across growth and costs, resulting in a slight reduction in our workforce in operations and marketing,” a Paytm spokesperson told MoneyControl in a statement. Because AI has performed better than we anticipated, we will be able to reduce staff costs by 10% to 15%. In addition, we assess instances of non-performance all year long.”
This move is part of the company’s broader strategy to streamline operations and capitalize on the benefits of AI technology. Paytm anticipates a positive impact on both growth and cost aspects, with the spokesperson emphasizing the company’s commitment to evaluating performance consistently.
The layoffs, which primarily affect the operations and marketing sectors, have been ongoing over the past month. In 2021, Paytm had already made a decision to let go of 500 to 700 employees based on non-performance.
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Insiders suggest that the recent layoffs are particularly concentrated on the lending team. Despite the success of Paytm’s lending business, the company faced pressure to trim costs due to an overstaffed lending team. The decision to discontinue small-ticket loans and Buy Now, Pay Later (BNPL) services was part of this effort to streamline operations and reduce expenses.
Responding to questions about the layoffs, an industry source, preferring anonymity, stated, “Their lending business is going very well; however, the team size they employed was more than 30% of the total employees. They recently shut down small-ticket loans and BNPL services. There is pressure to cut costs.”
On December 7th, Paytm announced plans to slow down its small-ticket postpaid loans while focusing on expanding high-ticket personal loans and merchant loans. This decision has faced criticism from brokerages, leading them to revise their revenue estimates for the company.
During an analyst meeting, the Paytm spokesperson addressed concerns, stating, “Insurance and Wealth will be a logical expansion of our platform, in continuation of our focus on the existing businesses. Having shown the strength of our distribution-based business model in loan distribution, we are expanding the same to focus on new businesses to drive scale.”
Despite the recent layoffs, Paytm’s parent company, One97 Communications, reported encouraging financials for the second quarter ended September 2023. The consolidated revenue stood at Rs 2,519 crore, marking a 32% increase compared to Rs 1,914 crore the previous year. The improvement was attributed to growing payment processing margins and increased loan disbursements.
While losses for Q2 of FY 24 were recorded at Rs 292 crore, down from Rs 571 crore in the same period of FY23, the company emphasized that the strategic realignment, including the reduction in postpaid loans, would not impact margins or revenue significantly.
In conclusion, Paytm’s recent move to implement AI automation and streamline operations has resulted in layoffs, primarily in the lending team. The company remains optimistic about the positive impact on efficiency and cost savings, emphasizing its commitment to evaluating performance consistently. The broader strategy includes a focus on expanding into insurance and wealth services to drive scale and growth.
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Faqs
Is Paytm firing employees?
Yes, Paytm recently laid off over 1000 employees as part of a strategy to implement AI automation for efficiency, resulting in a reduction in the workforce in operations, sales, and engineering teams.
Why did Paytm decide to lay off over 1000 employees?
Paytm implemented AI automation to drive efficiency, resulting in a strategic decision to streamline operations and reduce the workforce in operations and marketing.
How will AI automation impact Paytm’s employee costs?
Paytm expects to save 10-15% in employee costs as AI has delivered more efficiency than anticipated.
Is the recent round of layoffs solely due to non-performance?
While non-performance is a factor, the layoffs are also part of a broader strategy, including AI automation, streamlining operations, and evaluating cases of non-performance.
What sectors within Paytm are most affected by the layoffs?
The layoffs primarily impact the operations, sales, and engineering teams of Paytm.
Why did Paytm decide to discontinue small-ticket loans and BNPL services?
The decision is part of an effort to cut costs and streamline operations, particularly in response to pressure to reduce expenses in the lending team.
