Paytm mulls cost cutting; to slay off more than 6,000 employees

Paytm to debit salaries from wallets of more than 6,000 employees

Beleaguered payment aggregator firm, Paytm, may show the way out to its employees to reduce its expenses. One97 Communications, the fintech’s parent company, could cut its workforce by about 15-20% in the current financial year to reduce increasing losses. According to a report by news daily, Financial Express, the company aims to save ₹400-500 crore by cutting 5,000-6,300 jobs.

Increasing per-employee average cost:

In FY23, the company had an average of 32,798 employees on its payroll, with 29,503 actively working employees. Therefore, the company’s per-employee average cost was ₹7.87 lakh. For FY24, the total employee cost increased by 34% year-on-year to ₹3,124 crore, resulting in a per-employee average cost of ₹10.6 lakh.

Cutbacks already underway:

The report indicates that the process of layoffs has already begun. More than 1,000 employees were laid off in December 2023 to streamline operations and reduce costs. The exact number of employees for FY24 has not been disclosed yet. The company recently stated that investments in technology, sales, and financial services have led to an increase in employee costs. While continuing investments in these areas, the fintech plans to cut costs in other departments going forward.

Poor financial performance:

The company’s financial performance has also been subpar. It incurred a net loss of ₹550 crore in the January-March quarter, compared to ₹168 crore last year. Revenue from operations in the March quarter declined by 3% year-on-year to ₹2,267 crore. The company’s troubles began on January 31 when the Reserve Bank of India (RBI) imposed restrictions on Paytm Payments Bank, preventing the company from accepting new deposits and conduct of credit transactions. These restrictions have had a significant impact on the company’s fourth-quarter results.