Indian food delivery unicorn Zomato recently announced that it is set to lay off about 13% of its workforce due to the coronavirus pandemic’s impact on business.
The job cuts and temporary pay cuts for employees were announced by the company founder and Chief Executive Officer Deepinder Goyal through a blog published on the company website.
The blog said that due to the coronavirus pandemic, the business has been hit severely and the company is trying to conserve as much cash possible in an uncertain economic environment.
“Our business has been severely affected by the COVID lockdowns. A large number of restaurants have already shut down permanently, and we know that this is just the tip of the iceberg. I expect the number of restaurants to shrink by 25-40% over the next 6-12 months,” Goyal said.
As a result, “we do not foresee having enough work for all our employees,” he said. “We owe all our colleagues a challenging work environment, but we won’t be able to offer that to 13% of our workforce going forward.”
Earlier last month Zomato had sought voluntary pay cuts with the leadership taking major salary cuts. However, that didn’t help the company much as it now seeks to move to a temporary reduction in pay for the entire organization.
“Starting June, I am proposing a temporary reduction in pay for the entire organization. Lower cuts are being proposed for people with lower salaries, and higher cuts (up to 50%) for people with higher salaries,” he said.
“We expect these cuts to be discontinued as soon as the economy starts getting back on track. I foresee (and hope) this to be around six months from now.”
Goyal also said the company will extend partial or full work from home for some employees—across multiple countries where it is present—as it seeks to save on rental expenses.
“Our highest recurring expense today (outside of payroll) is real estate. We have 150+ offices globally, most of which are spaces for our sales & logistics teams. Given how well we have been working from home, we have decided to make partial or full work from home a permanent feature of our lives.”
The company is also expected to hold a global town hall to discuss details of these changes soon.
The employees who’ll be laid off will get a Zoom call invitation with the leadership, informing them about their future.
Assuring these employees of the extended support, Goyal said, “We are going to assure them that we stand by them, and will financially and emotionally support them to the fullest possible extent.”
Goyal said that the laid-off employees will continue to get 50% of their salaries for the next 6 months. Each and every employee leaving the company will also be allowed to keep their Zomato issued laptops and phones.
Talking about the contractual employees, Goyal said, “Some impacted employees work with us through manpower agencies and not directly on our payroll. We are going to help these agencies support these employees with two months of severance (vs. 15 days of contractual obligation).”
Goyal has also assured these impacted employees of continuous health care, ESOPs, and outplacement support for 6 months or until they find a job.
The layoffs at Zomato come as India’s restaurant industry is reeling from a prolonged slump in business after the country went into a lockdown in March to contain the spread of COVID-19.
Unemployment in India is on a rise since last year but the pandemic has added fuel to the fire and the country is now facing a huge joblessness crisis.
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