Zomato is laying off 10% (300) of its employees worldwide, joining a growing list of Indian startups that are shedding jobs as they try to control costs and sustain investor interest. It is cutting jobs in its content teams across 22 countries. It has started the process and will complete it within two weeks.
A company spokesperson confirmed the development. Zomato’s co-founder and CEO Deepinder Goyal has made clear the company’s intention of having “leaner content teams” in a blog post. He said that 40% of restaurants on its platform account for 92% of the traffic. The company wants to channelise its efforts in increasing frequency of data updates for such restaurants.
“We are also going to have to make important changes to our business and make sure we put every dollar and every Zoman behind the things that matter the most,” Goyal said, while explaining the changes.
The changes would mostly affect field staffers who collect content – primarily menus, data about opening hours and pictures of restaurants – in the US. It could also affect Zomato’s data collection force in every country where it operates, including India. Zomato lists 70,000 restaurants on its platform in India.
“The countries we entered in the recent past have not been working with our existing model of collecting content and building community relations – alternate models will need to be identified and implemented,” Goyal wrote in the blog.
The layoffs come at a time when Zomato is trying to adopt a transaction-led model. The company is keen to shift from an ad sales-driven model which was built largely on the strength of its content. In India, it launched online ordering services as well as table reservation services.
“Getting into transactions was always the natural next step for our business. Table reservations fit into Zomato as easily as online ordering did. The time has come for us to focus deeply on transactions in countries where it matters,” reads the blog post.
Although Zomato’s latest decision has a marginal impact on its Indian workforce, other Indian startups too seem to be streamlining their HR operations. While many startups have gone on to create value for investors and employees, some are compelled to either cut costs through job cuts or close down completely.
