Zomato rival Swiggy may fire 400 employees to become profitable before launching IPO

Zomato rival Swiggy is reportedly undergoing another round of layoffs, which could see the farewell of 350-400 employees, or about 6% of its workforce.

According to an ET report, which first reported the development, The layoffs affect various departments, including technology, customer service, and corporate roles.

The decision is part of Swiggy's strategy to reduce costs and achieve profitability as it gears up for an initial public offering (IPO), the report said.

Focusing on achieving profitability 

Swiggy currently employs between 5,500 to 6,000 people and is now focusing on becoming profitable, especially in its core food delivery business.

While this segment does not require significant capital infusion, Swiggy's grocery unit, Instamart, continues to be a cash-burning venture.

Swiggy launched its instant grocery delivery service, Instamart, in August 2020. At present, the service is available in over 25 cities, including Ahmedabad, Bengaluru, Chennai, Coimbatore, Chandigarh, Delhi, Gurugram, Hyderabad, Indore, Jaipur, Kolkata, and others.

The company's largest shareholder, Prosus, reported a 17% growth in the food business, while Instamart saw a 63% increase in gross merchandise value (GMV).

Swiggy's financial growth

Swiggy's move towards profitability is evident in its narrowing loss of $208 million in the six months ending September 30, 2023, a 35% decrease from the previous year. This is in contrast to its competitor Zomato, which reported a profit in the same period.

With about $800-900 million in the bank, Swiggy is preparing to file its draft IPO papers by the end of the current fiscal year. The expected $1 billion IPO will likely include a $600 million offer for sale by existing investors, ET reported.

The bigger picture tech layoffs

Swiggy's decision to lay off employees is part of a broader trend in the tech industry, often referred to as the “funding winter.” Notably, the funding winter has affected various elite startups and companies, including Flipkart and Byju's. Not just domestic companies, US-based firms, including Google, Microsoft, and Amazon also laid off thousands of employees. 

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