CEO Sriharsha Majety cited “challenging macroeconomic conditions” as one of the reasons for the job cuts.
In an email to employees, he said the growth rate of the company’s food delivery business has slowed down, which has resulted in lower profits and reduced income. He said the company overhired over the past two years, which was “a case of poor judgement” on his part and that he “should’ve done better here”.
He said that the company was shutting down its meat marketplace and taking a closer look at other verticals.
Read | Swiggy to sack 380 employees, CEO Majety tells staff; to shut meat biz vertical
Majety also said the impacted employees would get compensation of three to six months’ salary, depending on the employee’s tenure. They will also be eligible for medical Insurance cover until May 31, 2023, and will be able to keep their work laptops.
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Here’s the full text of Majety’s email:“Thank you for joining the all-hands meeting earlier today. As I’d mentioned in the session, we’re implementing a very difficult decision to reduce the size of our team as a part of a restructuring exercise.
In this process, we will be bidding goodbye to 380 talented Swiggsters. This has been an extremely difficult decision taken after exploring all available options, and I’m extremely sorry to all of you for having to go through with this.
Why are we doing this?
Adjusting to the new normal: In 2021, driven by a surge in demand during the second wave, our food delivery business grew very strongly. In addition, we’d also found strong early success with Instamart. With some definite exuberance about the future, we invested into building out our teams to be able to cater to the impending needs of the categories. However, in 2022, two things have happened.
Over the last year, under challenging macroeconomic conditions, companies around the world (public and private) are adjusting to the new normal, with refreshed investment horizons and accelerated timelines for profitability.
We’re no exception here, and have already advanced our own timelines for profitability on food delivery and Instamart.
While our cash reserves allow us to be fundamentally well positioned to weather harsh circumstances, we cannot make this a crutch and must continue identifying efficiencies to secure our long-term.
In addition, the growth rate for food delivery has slowed down versus our projections (along with many peer companies globally).
This meant that we needed to revisit our overall indirect costs to hit our profitability goals.
While we’d already initiated actions on other indirect costs like infrastructure, office/facilities, etc, we needed to right-size our overall personnel costs also inline with the projections for the future. Our overhiring is a case of poor judgement, and I should’ve done better here.
• Moving faster + doing more with less: Over the last year, we’ve also identified many areas for improvement in our pace of execution. Due to the iterative build-up of the different orgs, there have been some extra layers created in pockets. This definitely increased our communication overhead, and compromised our agility.
This meant that instead of doing more with less, we were doing less with more in these cases. Operating in multiple hyper-competitive categories means that we have very little room to slow down and we wanted to arrive at a more deliberate org design to be more nimble, effective, and efficient at the same time.
We’re already implementing the learning from this org-effectiveness work to not let this miss happen again.
What does this mean for new verticals?
While we continue to be fully committed to exploring new business opportunities, we have also taken a harder look at some of our existing new verticals. Effective very soon, we will be shutting down our Meat marketplace. While the team has done exceptionally well with solid inputs, we haven’t hit product market fit here despite our iterations. From a customer perspective, we will still continue to offer meat delivery through Instamart. We will continue to stay invested in all other new verticals.
How we’re handling departures
We have always believed in treating Swiggsters with care and respect, and we are pulling all stops to ensure this reflects in this tough process. We will be letting the impacted Swiggsters know starting today via 1:1 conversations. Girish & team have put together a comprehensive Employee Assistance Plan which we believe will help impacted Swiggsters with their financial, physical well being during the transition.
Details of the employee assistance plan for impacted Swiggsters:
• Cash payout between 3-6 months based on their tenure and grade will receive either an assured three months pay or Notice period + 15 days ex-gratia for every completed year of service + balance earned leave as per policy whichever is higher. This will assure all impacted employees with a minimum assured payout of 3 months. This includes variable pay / incentives at 100%. Joining Bonus, Retention bonus paid out will be waived off.
• The annual vesting cliff has been waived off. We will be extending vesting to the nearest quarter from the last working date. They will also be eligible to participate in the ESOP liquidity program slated for July 2023.
• Medical Insurance cover for them and nominated family members till May 31, 2023.
• Continued access to LinkedIn learning, and our wellness portal till March 31, 2023.
• Those who relocated in the last one year will have their relocation expenses reimbursed if they choose to relocate to their previous location or permanent address.
• Will be able to retain their allocated work laptops to help them continue their job search
For the ones who are not impacted:
For the ones who are not impacted, I know that this will be difficult for all of you as well. We will be bidding farewell to some of your colleagues, friends and it is not easy. I assure you that we have thought deeply about this and this decision is unfortunate but essential for our journey ahead.
Our focus today is on Swiggsters who are impacted and in ensuring we support them in their transition with respect and care. I’m sure you all have a lot of questions about the way forward and we will be setting up time very soon to discuss these.
Our business and overall execution has been on a very encouraging trajectory, and we’ve made huge strides in improving the consumer experience (including a very well done NYE ) and profitability.. We need to build on this progress, adjust to the new normal, and move forward towards becoming the best version of ourselves.”
