Covid-19 effect: Swiggy announces 1,100 job cuts

After Zomato, Swiggy sacked 1,100 employees across its offices in India on Monday. Co-Founder and CEO Sriharsha Majety announced the news in a town hall and sent an email to all his employees, giving details of the strategy to deal with the Covid-caused disruption. 

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Majety wrote in the email sent to the employees, “...today is one of the saddest days for Swiggy as we have to go through an unfortunate downsizing exercise…we, unfortunately, have to part ways with 1,100 of our employees spanning across grades and functions in the cities and head office over the next few days.”

Over the next few days, the HR team along with the line manager will have a one-on-one conversation with impacted employees, providing further details regarding the next steps and clarifying any questions if they have.

Majety wrote, “We are fully committed to providing the best financial, emotional and career-related support that we can to make this journey less painful, and to ease the burden on you and your families. We have done our best to be thoughtful and express our gratitude and support through a care package, with details below.”

The impacted employees will receive at least three months of salary, irrespective of their notice period or tenure. For every year the impacted employees have spent with the company, Swiggy will offer an extra month of ex-gratia in addition to their notice period pay, working out to between 3-8 months of salary depending on the tenure. For example, if someone’s notice period is three months and they’ve spent five years with the company, they will get eight months of salary.

Swiggy will also be extending ESOP vesting to the nearest quarter (including the months of the notice period) and waive off the 1-year cliff for those who have not completed a year. The company also extended its medical, term and accidental insurance for the impacted employees until December 31, 2020. The employees can also retain their allocated work laptops and get mobile phone communication allowance for the next three months. The brand will also support impacted employees who have relocated to join Swiggy within the last one year by reimbursing the expenses in case they wish to move back.

Majety shared Swiggy’s strategy to tackle the pandemic in five points:

1. The core food delivery business has been severely impacted and will stay impacted over the short term, but is expected to start growing again after that. While we are very fortunate to have raised capital just before Covid hit and have sufficient runway today, it is incredibly important to prepare for worse scenarios in the macro environment and make sure we are protected.
2. We also need to build a much leaner organisation 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.
3. We are choosing to scale down or shut down adjacent businesses that are either going to be highly volatile or will not be highly relevant for the next 18 months. The biggest impact here is on the cloud kitchen business, with many unknowns about volumes through the year. 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.
4. While this crisis has impacted our core business negatively, there is no doubt that we are now at an inflection point for the penetration of digital commerce and home delivery in India. This offers us opportunities to continue investing our efforts in grocery and other service offerings that we think will continue to do well.
5. Identify and significantly reduce every single indirect cost like hubs, office infrastructure, etc.

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