Zomato Lays Off 600 Employees Amid Slowdown in Food Delivery, Blinkit Losses, AI Thrust

Zomato has reportedly laid off 600 employees due to a slowdown in its food delivery sector and mounting losses in its quick commerce division, Blinkit, according to MoneyControl.

The company is also ramping up its investment in Artificial Intelligence (AI) to automate customer support functions in a bid to cut costs.

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A year ago, Zomato recruited 1,500 employees under its Zomato Associate Accelerator Programme (ZAAP) for customer support roles.

These workers were promised career opportunities in various departments, including sales, operations, programme management, support, supply chain, and category teams. However, many of these contractual employees did not have their contracts renewed at the end of their tenure.

According to former and current employees, those affected were provided with one month's salary as compensation and were dismissed without prior notice, with reasons cited including poor performance and punctuality, as per the MoneyControl report.

Zomato's shift towards automating customer support has rendered several of these roles redundant. The company recently introduced Nugget, an AI-driven customer support platform designed for businesses worldwide.

Nugget currently manages over 15 million support interactions per month across Zomato, Blinkit, and Hyperpure.

Challenges and Market Performance

Zomato is struggling with slowing growth in its core food delivery business due to a decline in consumer spending and difficulties in expanding beyond the top eight cities. Meanwhile, Blinkit has been facing increasing losses owing to rapid expansion and rising competition in the quick commerce sector.

Previous Layoffs and Financial Performance

In December 2022, Zomato laid off around 100 employees, accounting for approximately 4% of its workforce, across product, tech, catalogue, and marketing divisions. The company reported a 57% year-on-year decline in quarterly profit after tax (PAT) to ₹59 crore in Q3 FY25, down from ₹138 crore a year earlier and ₹176 crore in Q2 FY25.

However, its revenue from operations saw a 64% year-on-year increase to ₹5,404 crore in Q3, compared to ₹3,288 crore in the previous year and ₹4,799 crore in the preceding quarter.