The AI kicks in, Paytm fires over 1000 employees!

Fintech giant Paytm has recently laid off more than 1000 employees from its operations, sales, and engineering teams as part of its ongoing efforts to implement AI technology for improved efficiency. The company stated that the adoption of AI-powered automation is aimed at eliminating repetitive tasks and roles, resulting in a slight reduction in the workforce in operations and marketing.

A spokesperson for Paytm mentioned that the implementation of AI has exceeded expectations, allowing the company to save 10-15% in employee costs. Additionally, the spokesperson emphasized the company's continuous evaluation of non-performance cases throughout the year.

The layoffs are reported to be focused on the lending team, with sources indicating that the company's lending business is performing well. However, the team size within the lending department was reportedly more than 30% of the total employees. Paytm recently decided to slow down its small-ticket postpaid loans while expanding high-ticket personal loans and merchant loans, a move that led to concerns among brokerages and prompted them to cut revenue estimates for the company.

Despite the layoffs, Paytm remains optimistic about its strategic expansion, particularly in the insurance and wealth sectors. The company sees these areas as a logical expansion of its platform, building on the success of its distribution-based business model in loan distribution.

As of the second quarter ended September 2023, Paytm's parent company, One97 Communications, reported a consolidated revenue of Rs 2,519 crore, reflecting a 32% increase compared to the previous year. The company's losses for Q2 of FY24 were recorded at Rs 292 crore, a notable improvement from the loss of Rs 571 crore in the same period of FY23.

It's worth noting that Paytm had also conducted layoffs in 2021, letting go of 500 to 700 employees based on non-performance.