New Delhi: Online food delivery app Zomato plans to reduce over 10% of its workforce and will cut pay for the rest of its employees in order to deal with the economic downturn caused by the COVID-19 pandemic.
In an email to all employees, CEO Deepinder Goyal called the novel coronavirus a “black swan event for the world economy” and that the company needed to “preserve as much as cash as possible to weather the storm if the business environment gets worse or continues to be the same for the rest of the year or more”.
“While we continue to build a more focused Zomato, we do not foresee having enough work for all our employees. We owe all our colleagues a challenging work environment, but we won’t be able to offer that to ~13% of our workforce going forward,” Goyal said.
The CEO also added that while some employees have taken voluntary pay cuts so far, it hasn’t reduced costs enough.
“In spite of so many people’s effort, we continue to be short of our salary reduction target. Starting June, I am proposing a temporary reduction in pay for the entire organisation. Lower cuts are being proposed for people with lower salaries, and higher cuts (up to 50%) for people with higher salaries,” the email noted.
“If you have already taken a voluntary cut equal to or more than the proposed temporary reduction in pay, you will not be expected to take an additional cut. This temporary reduction in pay will also be eligible for 2x ESOP grants just like the earlier voluntary cuts. ”
The Economic Times reported that the job cuts would affect over 500 people.
For the employees who will be let go, Zomato says that they will pay 50% of their salary for the next six months.
“During this time, outside of the handover period of 1-2 weeks, we expect these folks to spend 100% of their time and energy towards looking for jobs outside of Zomato,” Goyal said in his email.
The Zomato CEO also added that not only have a “large number of restaurants have already shut down permanently”, but that this will just be the “tip of the iceberg”.
“I expect the number of restaurants to shrink by 25-40% over the next 6-12 months. What actually happens, for better or worse, is anybody’s guess.”