Background
The Indian food delivery market has been experiencing a downturn, forcing companies to become leaner and more disciplined. Swiggy, the Prosus Venture and SoftBank-backed company, is no exception.
Swiggy’s Plans for Profitability
In an email to employees on Friday, Swiggy co-founder and CEO Sriharsha Majety announced that the startup will be laying off 380 jobs as part of its efforts to conserve cash. This move comes as the company has accelerated its plans for profitability.
The Reason Behind Job Cuts
According to Majety, the startup over-projected growth in food delivery and needed to revisit its indirect costs to hit its profitability goals. He stated that the company had already initiated actions on other indirect costs such as infrastructure and office facilities but needed to right-size personnel costs as well.
A Case of Over-Hiring
Majety acknowledged that the startup’s over-hiring was a case of poor judgment, which he should have avoided. This move will help Swiggy conserve cash and become more disciplined in its operations.
Meat Marketplace Shutdown
In addition to job cuts, Swiggy has also decided to shut down its meat marketplace effective very soon. The decision comes after the company realized that it hadn’t hit product-market fit despite several iterations.
Impact on Employees
The impacted employees will be paid a severance of three to six months and additional days based on each year of service at the startup. Swiggy will also accelerate their vesting cliff and provide medical insurance for them and their dependents until May this year.
Market Downturn
The job cuts are part of a broader trend in the Indian startup ecosystem, with over 20,000 people losing their jobs since the market downturn began. The funding winter may continue for another 12 to 18 months, and industry leaders are warning about the potential turmoil and volatility ahead.
Flipkart’s Warning
In an interview late last year, Flipkart CEO Kalyan Krishnamurthy warned that a lot of startup founders will hit the market between April to June next year, which he called "the moment of truth" for the ecosystem.
Swiggy’s Future Plans
While Swiggy is shutting down its meat marketplace, it plans to continue exploring new business opportunities. The company had earlier hired a group of bankers last year to evaluate plans for a $1 billion initial public offering (IPO) in 2023 but is waiting for market conditions to change before going ahead with the plan.
Conclusion
Swiggy’s decision to lay off employees and shut down its meat marketplace is a testament to the challenges faced by startups in the current market environment. As the Indian startup ecosystem navigates this downturn, companies will need to become leaner and more disciplined to survive.
Table of Impacted Employees
| Category | Number of Employees |
| — | — |
| Meat Marketplace Team | 380 |
List of Affected Departments
- Meat Marketplace
- Finance
Timeline for Layoffs and Shutdowns
- Layoffs: Immediate effect
- Shutdown of Meat Marketplace: Effective very soon
Resources for Impacted Employees
- Severance Package: Three to six months, depending on tenure
- Vesting Cliff Acceleration: Yes
- Medical Insurance: Until May this year
