In a bid to alleviate soaring employee costs, Paytm, a prominent player in the digital payments sector, is mulling over slashing its workforce by up to 20% in the current financial year. This move comes amidst a backdrop of financial strain for the company, which has seen a substantial surge in its employee expenditure.
During the preceding financial year, Paytm maintained an average workforce of 32,798 employees, with around 29,503 actively engaged in various roles. However, the company’s financial report indicates a staggering 34% year-on-year increase in total expenditure, reaching Rs 3,124 crore in FY24. Correspondingly, the average cost per employee rose to approximately Rs 10,60,000.
To mitigate mounting losses and streamline operational costs, Paytm has embarked on an ambitious plan aimed at reducing employee expenses, with a target of saving Rs 400-500 crore. This initiative could potentially translate to a downsizing of 5,000-6,300 positions within the organization.
The process of downsizing has already commenced, with reports suggesting that over 1,000 employees were laid off across various departments in December of the previous year. While the exact figures for FY24 remain undisclosed, the company is steadfast in its commitment to optimizing its cost structure.
In an investor presentation, Paytm acknowledged the escalation in employee costs, attributing it primarily to investments in technology, merchant sales, and financial services. However, the company remains optimistic about leveraging artificial intelligence capabilities and focusing on core operations to achieve significant cost savings.
Despite the restructuring efforts, Paytm remains dedicated to nurturing talent and fostering leadership within its ranks. The company intends to promote high-performing individuals to leadership positions while actively recruiting new senior executives to drive growth initiatives forward.
However, the financial challenges faced by Paytm were evident in its recent quarterly performance. The company reported a net loss of Rs 550 crore in the January-March quarter, a significant increase from Rs 168 crore in the corresponding period last year. This decline in profitability was primarily attributed to a 2.9% year-on-year drop in revenue, which fell to Rs 2,267.1 crore.
The tumultuous financial landscape for Paytm was further exacerbated by regulatory interventions. Restrictions imposed by the Reserve Bank of India on Paytm Payments Bank in late January significantly hampered the company’s ability to transact and accept deposits, consequently impacting its performance in the fourth quarter.
Looking ahead, Paytm aims to bolster its merchant ecosystem by recruiting additional sales executives and enhancing governance structures across its subsidiaries. The company envisages appointing subject matter experts as advisors or independent directors to ensure regulatory compliance and reinforce its commitment to sustainable growth.
In summary, Paytm’s contemplation of workforce reduction underscores the challenges posed by escalating employee costs amid a turbulent financial environment. As the company navigates through these hurdles, its focus remains steadfast on optimizing operations, fostering talent, and adapting to regulatory dynamics to secure its position in the competitive fintech landscape.
