Swiggy sacks 1,100 employees as Covid-19 derails Cloud kitchens

Food delivery platform Swiggy on Monday announced to lay off 1,100 employees spanning across grades and functions in the cities and head office over the next few days as Covid-19 continues to hurt its business.

All impacted employees will receive at least three months of salary, irrespective of their notice period or tenure, Sriharsha Majety, Co-founder and CEO, Swiggy, told employees in a virtual town hall meeting.

"For every year they have spent with us, we will be offering 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," said Majety.

Swiggy said if someone's notice period is three months and they've spent five years with the company, they will get eight months of salary.

The company will inform those being laid off in one-to-one video calls.

Swiggy said it is also going 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 kitchens business, with many unknowns about volumes through the year. Since the onset of Covid-19, we have already begun the process of shutting down our kitchen facilities temporarily or permanently, depending on their outlook and profitability profile," Majety told the employees.

"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".

Last week, Swiggy's closest rival Zomato announced to lay off nearly 13 per cent of its workforce -- over 600 employees -- via Zoom calls, along with salary cuts for the rest of the employees for at least the next six months starting June, with higher cuts going up to 50 per cent for people in senior roles.

"The core food delivery business has been severely impacted and will stay impacted over the short term," said Swiggy.

The food delivery platform is extending ESOP vesting for those impacted to the nearest quarter (including the months of notice period) and waive off the 1-year cliff for those who have not completed 1 year.

It will also provide medical insurance cover for those impacted and nominated family members till December 31 2020.

"Additionally, we will also be providing insurance cover for their parents," said the company.

Majety said he needs 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," he added.

Swiggy said it will also help those impacted with smooth career transition.

"We will have a dedicated and fully-trained talent acquisition team assisting impacted employees round the clock in identifying suitable opportunities and providing necessary career support for the next 3 months," said the Swiggy CEO.