Swiggy to lay off 1100 employees as COVID-19 blunts hospitality

Covid 19 has crippled the foundation of the economical world as it was, and has caused distress to not only non essential, but essential businesses as well. Even with the rising demand of food delivery apps like Zomato and Swiggy, companies are struggling to keep up with the pandemic. Following Zomato’s announcement to lay off 13% of its workforce just a few days back, Swiggy has announced that it will be laying off 1,100 employees as well, citing the uncertainty brought by COVID 19.

The announcement came from a blog post, which was originally drafted as an email to company workers by Sriharsha Majety (Co-founder & CEO, Swiggy). He said, “…today is one of the saddest days for Swiggy as we have to go through an unfortunate downsizing exercise.”

He mentioned Swiggy’s strong positioning at the start of 2020, saying that “we started chalking out an accelerated path to profitability for the food delivery business last December.” However, with COVID 19, came uncertainty. While the virus is predicted to have an overall positive impact on the food delivery business in the long term, the short term impact on the business called for optimization of the company, forcing it to “look even harder at our cost base and preparedness for the road ahead.”

Thus, the company has decided to lay off 1100 employees at the time, offering them a care package and financial backing. Swiggy also states that this move will help it to come out stronger at the the other end, as the food delivery business is expected to grow and the company plans to build on existing capabilities.

“We also need to build a much leaner org and reduce costs to be able to withstand any further risks from the uncertainty. We will have to reduce our expenses such that we can achieve profitability with a smaller order volume than hitherto planned. This will be done keeping in mind already identified efficiencies, along with additional reductions in teams and initiatives that will have lower activity because of Covid,” the email from the company read.

Moreover, Swiggy is also planning to scale down, or completely shut off adjacent businesses that are going to be “highly volatile” or at least not much relevant for the next 18 months. That includes the cloud kitchen business, which is up in the clouds of uncertainty. “Since the onset of Covid, we have already begun the process of scaling down our kitchen facilities temporarily or permanently, depending on their outlook and profitability profile. We are already operating at significantly lower levels on our staffing and physical infra than our earlier footprint, and will continue to optimize before we get more clarity on order volumes for food delivery,” the blog added.

The email also added that the company is going to invest a lot of time and resources in the grocery business, which is performing exceptionally well.

The founder said that employees will be laid off with the utmost respect, as HR will engage with everyone on a 1 on 1 basis, whether they are being laid off or not, and be available to answer any questions.

The announced care package includes a baseline of at least 3 months of salary. People who have been at the company longer will be compensated for their time, as for every year spent at the company, they would receive an additional month of salary. This means that anyone who has been at Swiggy for, let’s say 5 years, will receive their normal salary for 3+5= 8 months. For those who went the equity route, Swiggy would be extending ESOP vesting to the nearest quarter(including the months of notice period) instead of the standard annual vesting. Moreover, it will also waive off the 1 year cliff for those who have not completed an year.

The company also promised Medical Insurance cover (for affected employees and their families), Accident and Term insurance and “A Wellness Assistance Programme (to ensure the physical, emotional/mental and financial well-being of impacted employees and their families), all till 31st December 2020.

Swiggy will also provide career transition support by the use of dedicated teams, connectivity support by letting the employees retain their work laptops, learning support by providing free LinkedIn Learning access for the next 3 months and relocation support to those who have relocated to join Swiggy within the last 1 year by reimbursing the expenses in case they wish to move back.

Just a few days back, Zomato announced a similar move, saying that it plans to lay off 520 employees , which amounts to be about 13% of its workforce. The mail sent to company employees also added that those staying with the company will also face pay cuts.

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