As the Prosus Venture and SoftBank-backed Indian food delivery company attempts to negotiate the market downturn that has compelled businesses to become leaner and more disciplined, Swiggy plans to eliminate 380 workers and shut down its meat marketplace.
Swiggy co-founder and CEO Sriharsha Majety said in an email to staff on Friday that the firm has advanced its ambitions for profitability and now needs to make painful choices to conserve money. The business, which has its headquarters in Bengaluru, employs roughly 6,000 people and was valued at $10.7 billion in a fundraising round in January of last year.
Majety claimed that the startup
like other businesses around the world in the same industry, overestimated the potential of meal delivery. “This meant that in order to achieve our profitability targets, we needed to review our total indirect costs. Although we had already started taking steps to reduce some indirect expenses, such as those associated with infrastructure, office space, and other facilities, we still needed to adjust our overall personnel costs to reflect future estimates. We made a mistake by recruiting too many people, and I could have handled this situation better,” he wrote to the staff.
We’ve also found a lot of room for improvement in our execution rate over the past year. There have been a few extra layers added in some places as a result of the iterative construction of the various orgs. Our ability to communicate effectively was obviously hampered, as was our agility. This meant that in these situations, we were doing less with more rather than more with less.
According to Majety
The business also intends to close its meat marketplace “effective very soon.”
“While we are fully committed to investigating new business opportunities, we have also given several of our current new sectors a closer look. We will be closing down our meat market as of very shortly. Despite the team’s outstanding performance and excellent contributions, we haven’t yet achieved product-market fit in this case. From the perspective of the customer, we will keep providing meat delivery through Instamart. We will keep funding all other emerging areas.
According to Majety’s email, the affected workers would get a severance payment of three to six months as well as additional days for each year of employment with the business. Along with providing medical insurance for them and their dependents until May of this year, Swiggy will also accelerate their vesting cliff.
The job cuts that started last year have continued into 2023. Numerous startups have made personnel reductions in recent months, including Zomato, Ola, Byju’s, Unacademy, Cashfree, CoinDCX, Dunzo, and ShareChat. Industry estimates indicate that since the market slump, more than 20,000 workers in India’s startup workforce have lost their jobs.
TechCrunch previously reported that Swiggy hired a group of bankers last year to assess plans for a $1 billion initial public offering for 2023. In order to proceed with the strategy, it is currently waiting for the market conditions to alter.
According to Kalyan Krishnamurthy
CEO of e-commerce giant Flipkart, the financial winter for the startup ecosystem may extend another 12 to 18 months, and the sector may have to deal with “a lot of instability and volatility.”
Between April and June of next year, according to his prediction, “a lot of company founders will hit the market, and that’s the moment of truth for the ecosystem,” he said.