Coronavirus impact: Swiggy lays off 1,100 employees, announces new way forward

In a townhall email, Sriharsha Majety, Co-founder and CEO of the Bengaluru-based foodtech unicorn Swiggy, said that the company will be taking steps towards growth and reducing cost at the same time. In the mail, he said:

"As I’d mentioned during the session, today is one of the saddest days for Swiggy as we have to go through an unfortunate downsizing exercise. With a heavy heart, I have tried to share the reasons and details of the process below, because you deserve to know. In line with the above business decisions, we unfortunately have to part ways with 1,100 of our employees spanning across grades and functions in the cities and head office over the next few days."

Harsha added that they had started chalking out an accelerated path towards profitability for the food delivery business in December.

"We also started making great progress on our unit economics over the following months before Covid hit us. We had mentioned that we will be focusing on being efficient everywhere – including employee costs – and that we’d come back when we have greater clarity," said Harsha. 

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He pointed out in the email:

1. The core food delivery business has been severely impacted and will stay impacted over the short term, but is expected to start growing again after that. We need to hence prepare to come out stronger on the other side by continuing to build on capabilities that will help us make the most of the opportunity when things are better again. While we are very fortunate to have raised capital just before COVID-19 hit and have sufficient runway today, it is incredibly important to prepare for worse scenarios in the macro environment and make sure we are protected. 
2. We also need 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-19. 
3. We are choosing 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. We are already operating at significantly lower levels on our staffing and physical infra than our earlier footprint, and will continue to optimise before we get more clarity on order volumes for food delivery.
4. While this crisis has impacted our core business negatively, there is no doubt that we are now at an inflection point for the penetration of digital commerce and home delivery in India. This offers us opportunities to continue investing our efforts in grocery and other service offerings that we think will continue to do well. We are going to invest in these high-confidence efforts to focus not on surviving alone, but on growing along the way by adapting very quickly. To enable this, we have already re-aligned some team members from other businesses into these initiatives.
5. Identify and significantly reduce every single indirect cost like hubs, office infrastructure, etc. While we will come back to share more information on this, it is one of the areas where we feel the cut is most prudent given it doesn’t affect customer or employee experience. We’ve all done some of the greatest work of our time at Swiggy over the last few weeks working remotely, and that’s reason enough to believe this can be done. 

"Over the next few days, the HR team along with the line manager will have a 1-1 conversation with impacted employees providing further details regarding the next steps and clarifying any questions you may have. All other employees will receive appropriate communication from your line managers regarding the continuity of your role with Swiggy," he added.

Adding details of the care package, Harsha said that, there will be different care packages in place. In terms of financial support all the impacted employees will receive:

1. Three months of salary irrespective of their notice period or tenure
2. 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 three to eight months of salary depending on the tenure. Citing an example he said - If someone’s notice period is three months and they’ve spent five years with us, they will get eight months of salary.

Harsha also added that they will also be extending their ESOP vesting to the next quarter, from their standard policy of a one-year cliff and annual vesting. Swiggy has also waived off the one-year cliff for those who have not completed a year.

The foodtech startup is also working on a healthcare plan. For those who are impacted and their families, Swiggy is providing — medical insurance cover for them and the nominated family till December 31 2020, as well as insurance cover for their parents, accident and term insurance till December 31, 2020.

The team is looking at wellness assistance programme to ensure the physical, emotional/mental and financial well-being of impacted employees and their families, providing unlimited tele/video consultation access to experienced doctors, counsellors and financial advisors till December 31, 2020.

Swiggy is also working to ensure a smooth career transition for the impacted employees. The team has 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 three months. 

"We will also offer free outplacement support from RiseSmart for mid-senior management employees, giving full access to their career coaching services, content and personalised job search," said Harsha. Swiggy has also started a learning support, where they will be giving free LinkedIn Learning Access — for both technical and professional skill development.

The foodtech unicorn is also providing connectivity support and relocation support. "We will support impacted employees who have relocated to join Swiggy within the last one year by reimbursing the expenses in case they wish to move back," he added,

He added:

"A dedicated set of HR team members will assist the impacted employees with their queries pertaining to the Care Package, reimbursement and settlements, insurance, and any other relevant areas. To all impacted teammates, I cannot even imagine how stressful this can be and want to let you know we are by your side and are going to do everything we can to help with the situation. We have all built the company together brick by brick and have been very lucky to have you join us on this journey. I am very sorry for having to make this decision, but want to wish you only the very best with everything and want to thank you deeply for all your contributions to Swiggy."