Zomato lets go of 600 employees amid slowdown and AI efficiencies
This decision has led to a lot of uncertainty and anxiety among the affected employees. The company is going through a rebranding process and restructuring its workforce. Many people are questioning the ethics of letting go of employees during a pandemic. Zomato's reputation may be at stake due to this sudden move.
Zomato, a prominent player in the quick commerce and food delivery industry, has reportedly laid off 600 customer support associates in the past year. This move was attributed to the implementation of an AI-powered customer support platform called Nugget, which resulted in operational efficiency, as per sources familiar with the matter.
The news of the layoffs was initially covered by Outlook Start-Up and Moneycontrol. Zomato, soon to be rebranded as Eternal, had previously recruited around 1,500 employees through its Zomato Associate Accelerator Programme (ZAAP), predominantly for customer support positions, offering them the opportunity to transition into other roles. However, a significant portion of these contract workers were not retained once their tenure ended. This information has been corroborated independently by YourStory.
Zomato Layoffs and Employee Concerns
According to a report by Outlook Start-Up, over 500 employees were terminated from Zomato's offices in Gurugram and Hyderabad without much prior notice. Employees reportedly expressed dissatisfaction with the lack of clarity regarding the reasons for their dismissal, citing issues such as minor attendance discrepancies, strained relationships with their managers, and performance evaluations generated by AI.
In February, Zomato introduced its proprietary AI-driven customer support solution, Nugget, aimed at businesses. Deepinder Goyal, the Co-founder and CEO of Zomato, described Nugget as an AI-centric, no-code platform capable of autonomously resolving up to 80% of customer queries. The platform has already facilitated over 15 million support interactions for Zomato's portfolio of brands.
Industry Trends and Response
These developments align with broader trends in the e-commerce sector, where companies are increasingly turning to AI solutions to enhance operational efficiency and reduce costs. Meesho, an e-commerce platform based in Bengaluru, reported a 75% reduction in customer service expenses following the launch of its multilingual Gen AI-powered voice bot, which was handling a substantial volume of calls daily.
As the food delivery market experiences a slowdown in growth due to subdued urban consumption patterns, Zomato faced a significant decline in profits during the third quarter of fiscal 2025, partly attributed to a demand slump. Additionally, its quick commerce division, Blinkit, has encountered financial challenges amidst intense competition and rapid expansion efforts across various locations and product offerings.
Zomato's strategic focus has also extended to revamping its dine-out and other offline ventures. Following the acquisition of Paytm's internet ticketing division, the company has been working on enhancing its presence in these segments through initiatives like District.
In HONESTAI ANALYSIS, the industry's shift towards AI-driven solutions and operational optimizations underscores the evolving landscape of customer service and support functions in the digital era.