Trouble for Paytm began on January 31 this year, when the Reserve Bank of India (RBI) restricted Paytm Payments Bank from accepting additional deposits and top-ups, and making credit transactions to customer accounts, among other restrictions.
Tech company One97 Communications, which runs the Paytm brand, may lay off around 5,000-6,300 employees in the coming days. The company is preparing to reduce employee costs. It is being said that Paytm may have to reduce its workforce by about 15-20% this financial year. According to a report by Financial Express, the company had an average of 32,798 employees working in FY23. Of these, 29,503 were active employees. The company’s average cost per employee was Rs 7.87 lakh. Total costs have increased 34% year-on-year (y-o-y) to Rs 3,124 crore in FY24 and the average cost of employees is expected to increase to Rs 10.6 lakh.
Process is already running
According to the news, the process of reducing the number of employees is already underway. In December, the company reportedly fired more than 1,000 employees from different departments. The number of employees in FY 2024 has not been announced. The company said in its investor presentation that in recent years, our employee costs have increased due to investments in technology, merchant sales and financial services.
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The company’s financial results are affected
One97 Communications’ net loss widened to Rs 550 crore in the January-March quarter from Rs 168 crore a year ago, driven by a drop in its revenue. Revenue from operations fell 3% year-on-year to Rs 2,267 crore in the March quarter. The company believes that optimising cost structure, leveraging AI capabilities and focusing on core business will help achieve significant cost efficiencies.
Trouble for Paytm began on January 31, when the Reserve Bank of India (RBI) restricted Paytm Payments Bank from accepting additional deposits and top-ups and making credit transactions to customer accounts, among other restrictions. The RBI restrictions on the payments bank badly impacted its fourth quarter results. The company is now making vigorous preparations to prepare itself.
