AI is finally doing what it was most feared of. Paytm and its parent company One97 have officially joined the bandwagon of firing employees. According to a close source to the company the unprecedented layoffs are followed by unanticipated success by AI and also due to the financial crunch the fintech company is experiencing.
Commenting on reports of layoffs at the company, a spokesperson from the fintech company confirmed that there has indeed been a reduction in its workforce in the operations and marketing team. According to sources, the fintech started the process of layoffs as early as October.
A close source to the ground reality at Paytm highlighted that the company is aiming to transform its operations by incorporating Artificial Intelligence and eliminating “repetitive tasks and roles”.
“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 revealed.
The spokesperson further highlighted that the company will be able to save 10-15% on employee costs by using powered automation.
The spokesperson acknowledged the behemoth success by AI and also revealed that the automation delivered more than anyone expected. He also added that while all of these are a culmination of reasons leading to the layoffs non-performance and inefficiency of certain employees were evaluated constantly through out the year.
Does Paytm plans on keeping AI and employees both?
The company also highlighted that it plans to increase manpower by 15,000 in its core payments business in the coming year. The decision to cut jobs is aligned with the company’s broader efforts to realign its businesses. The fintech company anticipates further cost-cutting measures in the upcoming months as it navigates changes in its operational structure.
“With a dominant position in the payments platform and a proven profitable business model, we will continue to innovate for India,” the statement said, adding that it intends to expand business verticals like insurance and wealth.
Therefore, while the company is trimming repetitive roles and non-performers, it is also hiring fresh talent to drive growth across new business segments.
The layoffs at the company are not an isolated incident and similar measures have been taken by several new-age companies to cut costs and optimise tasks using powered technologies. It may be noted that a significant number of employees in the new-age financial companies segment have lost their jobs in the first three quarters of the ongoing year.
The layoffs at the fintech company have been reported just a few weeks after the company announced that it would be scaling back on small-ticket loans up to Rs 50,000 under its BNPL offering, Paytm postpaid, and increase focus on high-ticket loans.
Following the announcement, the company’s shares tanked sharply by 20% after multiple brokerages and other firms had a say about the negative impact this move could have on the company.
Has AI compelled other companies for sudden layoffs?
Not just this, but newer tech startups have accounted for the most number of job cuts across the country this year. Data from Longhouse Consulting shows that new companies sacked around 28,000 people this year.
The layoff rates have risen exponentially as compared to the last two years, as only 4,080 people were laid off from these companies in 2021, and 20,000 people laid off in 2022. Majority of the 28,000 people were laid off just in the span of six months.
While PhysicsWallah, Udaan, Third Wave Coffee and Bizongo had extremely high layoff rates this year, firms like Flipkart and Byjus decided not to give appraisals this year to its top performers.
