Food delivery giant Zomato has laid off 600 customer support associates, a year after hiring them, as part of its push towards automation and cost-cutting. The move comes at a time when the company is facing sluggish growth in its core food delivery business and mounting losses in its quick commerce division, Blinkit.
Why Were Employees Laid Off?
Zomato has been actively integrating artificial intelligence (AI) into its customer support functions, making several roles redundant. The layoffs largely impacted contractual workers hired under the Zomato Associate Accelerator Program (ZAAP), which aimed to provide career growth opportunities in sales, operations, and management. However, many of these employees did not have their contracts renewed.
Several former employees claimed they were dismissed without notice and were offered just one month’s salary as compensation. Reasons cited for termination included poor performance and punctuality, but insiders believe AI-driven automation played a significant role in the downsizing.
Automation and the Rise of AI-Powered Support
Zomato recently launched Nugget, an AI-driven customer support platform handling over 15 million interactions per month across Zomato, Blinkit, and Hyperpure. The company has been increasingly relying on AI to streamline operations and reduce manpower costs.
Financial Challenges and Business Slowdown
The layoffs coincide with Zomato’s struggle to expand beyond major metropolitan areas, amid a slowdown in food delivery demand. The company’s financial performance has also been under pressure:
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Q3 FY25 profit after tax (PAT) declined 57% YoY to ₹59 crore, down from ₹138 crore a year ago.
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Revenue from operations grew 64% YoY to ₹5,404 crore but failed to offset rising expenses.
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Losses in Blinkit have surged as the quick commerce segment faces intense competition.
Frequent Layoffs and Leadership Exits
This is not the first time Zomato has reduced its workforce. In December 2022, the company laid off 100 employees across various departments, including product, technology, and marketing.
Additionally, a series of top-level exits have raised concerns about leadership stability. Notable resignations include co-founder and chief people officer Akriti Chopra (September 2023), former CTO Gunjan Patidar (January 2023), and co-founder Mohit Gupta (late 2022).
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