As per an informed source, Paytm, a prominent fintech giant, has undergone a significant downsizing initiative, resulting in the termination of over 1000 employees across its operations, sales, and engineering teams. The primary group affected by these layoffs is reported to be the lending team.
While Paytm attributes these job cuts primarily to the adoption of artificial intelligence (AI) for enhancing operational efficiency, the move aligns with the company’s strategic decision to scale down its small loan disbursement business.
In response to queries, a Paytm spokesperson stated, “We are restructuring our operations with AI-powered automation to enhance efficiency by eliminating redundant tasks and roles. This will lead to a modest reduction in our workforce within operations and marketing, resulting in a 10-15% saving in employee costs. Furthermore, we continually assess instances of non-performance throughout the year.”
The spokesperson outlined future plans, emphasizing, “Insurance and wealth will be logical expansions of our platform, building upon our focus on existing businesses. Following the success of our distribution-based business model in loan distribution, we are extending the same approach to new ventures to achieve scalability.”
Insiders reveal that a significant proportion of the employees affected by the layoffs are from the lending team, a move anticipated after recent developments in Paytm’s small lending business.
Paytm’s decision to scale down its small-ticket loans business, particularly those below Rs 50,000, follows regulatory changes by the Reserve Bank of India (RBI) regarding unsecured lending. The company, however, expressed intentions to expand its high-ticket personal and merchant loans.
This strategic shift has faced criticism from brokerages, leading to a downgrade in Paytm’s stock by global brokerage firm Goldman Sachs. The rating has shifted from ‘buy’ to ‘neutral,’ with a revised target price of Rs 840 per share, down from the earlier Rs 1,250 per share.
Despite these challenges, Paytm remains committed to its growth plans, including the recruitment of over 15,000 contract salespeople to expand its merchant network. Vijay Shekhar Sharma, the company’s leader, has reiterated Paytm’s objective of achieving operating profit within a year through the expansion of online wealth management services, increased merchant onboarding, and cost-cutting through AI automation.