NEW DELHI: In one of the biggest culls at a new-age unicorn, fintech giant Paytm has laid off more than 1000 employees from its operations, sales and engineering team.
While Paytm largely attributes the job cuts to the implementation of artificial intelligence (AI) to increase efficiency, this exercise comes as the Noida-based company is scaling down its small loan disbursement business.
"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. We will be able to save 10-15% in employee costs as AI has delivered more than we expected it to. Additionally, we constantly evaluate cases of non-performance throughout the year," said Paytm's spokesperson.
"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,” the spokesperson said.
According to a source aware of the development, a large chunk of employees who have been asked to exit belong to the lending team. "This was an expected move after the recent developments in the small lending business," the source said.
Following the tightening of terms and conditions around unsecured lending by the Reserve Bank of India (RBI), Paytm recently decided to scale down its small-ticket loans business of less than Rs 50,000.
The company earlier this month had said that it would expand its high-ticket personal loans and merchant loans. According to Paytm's September quarter numbers, postpaid loans amounting to less than Rs 50,000 comprised 72-75% of Paytm's total disbursements in the Buy Now, Pay Later (BNPL) category.
This decision by the Vijay Shekhar Sharma-led company has not gone well with brokerages as some of them have reduced their revenue estimates and share price targets. Global brokerage firm Goldman Sachs has downgraded the stock, changing its rating from 'buy' to 'neutral' and revising the target price to Rs 840 apiece from the earlier Rs 1,250 apiece.
Paytm also had plans to hire more than 15,000 contract salespeople to add more merchants to its network. Last week Sharma had said that Paytm is aiming to generate an operating profit in under a year by boosting its online wealth management services, onboarding more merchants and cutting costs from AI automation.
