Paytm Lays Off Over 1,000 Employees as AI Automates Jobs

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Human vs. Machine: Paytm Chooses AI

| Updated: December 25, 2023 16:52

Paytm Lays Off Over 1,000 Employees

Fintech major Paytm has laid off over 1,000 employees from its operations, sales, and engineering teams as the firm implements a slew of AI technologies to improve efficiency. The layoffs come as Paytm seeks to cut costs and streamline its operations in the face of increasing competition from other fintech players.

AI-Powered Automation Drives Efficiency

Paytm’s spokesperson told Moneycontrol that the company is “transforming its operations with AI-powered automation to drive efficiency, eliminating repetitive tasks and roles to drive efficiency across growth and costs.”

The spokesperson added that the company expects to save 10-15% in employee costs as a result of the AI implementation. “We will be able to save 10-15% in employee costs as AI has delivered more than we expected it to. Additionally, we constantly evaluate cases of non-performance throughout the year,” the spokesperson said.

Focus on Insurance and Wealth Management

Paytm also plans to expand into new areas such as insurance and wealth management. “Insurance and Wealth will be a logical expansion of our platform, in continuation of our focus on the existing businesses. Having shown the strength of our distribution-based business model in loan distribution, we are expanding the same to focus on new businesses to drive scale,” the Paytm spokesperson said.

Challenges and Layoffs

The layoffs at Paytm are not the first for the company. In 2021, Paytm let go of 500 to 700 employees based on non-performance. The company’s lending business is going strong, but the team size was more than 30% of the total employees. They recently shut down small-ticket loans and BNPL services, adding to the pressure to cut costs.

The company’s decision to slow down its small-ticket postpaid loans has also not gone well with brokerages, prompting them to cut their revenue estimates for Paytm. However, the company maintains that the decision will not have any impact on margins or revenue.

Financial Performance

One97 Communications, the parent company of Paytm, reported a consolidated revenue of Rs 2,519 crore for the second quarter ended September 2023, up 32% from the previous year. The company’s losses were recorded at Rs 292 crore in Q2 of FY24, compared to Rs 571 crore in Q2 of FY23.

Paytm’s ESOP expenses for the quarter stood at Rs 385 crore.

The Future of Paytm

The layoffs at Paytm are a sign of the challenges facing the fintech industry in India. As competition heats up and margins come under pressure, companies are being forced to find ways to automate and streamline their operations. AI is playing a key role in this process, and it is likely that we will see more layoffs in the fintech industry in the years to come.

It remains to be seen whether Paytm’s focus on AI and new businesses will be enough to drive growth and profitability in the long run. The company faces stiff competition from established players such as HDFC Bank and ICICI Bank, as well as from upstarts like PhonePe and Google Pay. It will be interesting to see how Paytm navigates this challenging landscape in the years to come.

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