E-commerce firm Flipkart and food delivery company Swiggy, two of the biggest startups, are laying off employees. Walmart-owned Flipkart is looking to let go of 1,000 employees, according to the people familiar with the matter. This represents around 5-7 per cent of its total workforce, as part of its annual performance review exercise.
Flipkart is intensifying its efforts to achieve profitability as it is eyeing a valuation of approximately $60 billion at the time of its initial public offering (IPO), now planned in 2025-2026, instead of this year, according to people familiar with the matter. The firm might consider listing in the US or any other geography, including India.
The company has been implementing various processes to make it IPO-ready. This includes creating an effective system of corporate governance, improving key finance operations and functions, and trimming down its workforce. “The company has been conducting a regular exercise of trimming its workforce based on performance by about 5-7 per cent as part of the strategy to make the organisation leaner and efficient,” said a person in the know. The company has a workforce of about 22,000 currently.
Flipkart CEO Kalyan Krishnamurthy held a townhall with employees on January 25, during which he said that the company’s financial health is improving, according to the sources. He mentioned that Flipkart’s IPO may not happen this year. He said that Flipkart has gone live with its own UPI (Unified Payments Interface) handle, currently available to a closed user group of 10,000 to be scaled soon. In the last eight years, he said that the company’s cash losses are at a historic low in the month of January. Travel as a business, especially domestic air travel, is a big revenue generator. He said the focus on hotel properties is also going to increase. He said that the company’s grocery business is scaling up and has grown by 50 per cent in the last 6 months.
Flipkart Internet, the marketplace arm of the e-commerce giant, recently reported a 42 per cent growth in operating revenue for FY23 at Rs 14,845 crore. Its total loss declined by 9 per cent to Rs 4,026 crore, according to data accessed by business intelligence platform Tofler.
Total expenses grew by 26 per cent to Rs 19,043 crore in FY23. Employee benefit expense was Rs 4,482 crore, an increase from Rs 3,735 crore in the previous period. The firm spent Rs 6,571 crore on logistics in FY23, a 30 per cent increase compared to the previous period. Advertising and promotional expenses increased to Rs 2,407 crore from Rs 1,945 crore.
IPO-bound Swiggy is also looking to let go of 350-400 employees or 6 per cent of its workforce as part of an operational efficiency drive, according to the sources. The Bengaluru-based firm has about 6,000 employees.
“These layoffs may happen across technology and call centre units,” said a person.
In January last year, Swiggy laid off 380 employees, citing challenging macroeconomic conditions and a slowdown in the growth of its food-delivery business.
Udaan recently laid off about 120 employees, or 6 per cent of its workforce of 1,600, said a source about India’s largest business-to-business (B2B) e-commerce firm that is focusing on profitability amid tight liquidity and a global economic slowdown. The layoffs are related to the company merging its food and non-food division units, said the source. In November 2022, Udaan laid off 350 employees across department functions in a move to drive cost efficiency. Before that, in June 2022, the firm sacked 180 employees.
First Published: Jan 25 2024 | 10:05 PM IST