In a significant move, Paytm, a leading fintech unicorn, has laid off over 1,000 employees across its operations, sales, and engineering teams, marking one of the largest workforce reductions at a new-age unicorn. The company attributes the job cuts predominantly to the integration of artificial intelligence (AI) to enhance operational efficiency. Paytm emphasizes its ongoing transformation, utilizing AI-powered automation to eliminate repetitive tasks and streamline operations, leading to a moderate reduction in workforce within the operations and marketing departments. The spokesperson for Paytm explains that this strategic shift to AI is expected to result in a 10-15% reduction in employee costs, surpassing initial expectations.
This workforce reduction coincides with Paytm’s strategic decision to scale down its small loan disbursement business, particularly in response to the Reserve Bank of India’s (RBI) tightened regulations around unsecured lending. Paytm aims to navigate these changes by focusing on high-ticket personal loans and merchant loans while phasing out smaller-ticket loans of less than Rs 50,000. The restructuring aligns with Paytm’s commitment to adapt to evolving market conditions and regulatory frameworks.
However, Paytm’s recent decisions have faced market skepticism, especially regarding its scaling down of small-ticket loans. Brokerages have adjusted revenue estimates and share price targets in response, with global brokerage firm Goldman Sachs downgrading Paytm’s stock from ‘buy’ to ‘neutral’ and revising the target price to Rs 840 per share from the earlier Rs 1,250 per share. Despite the challenges, Paytm’s leadership, led by Vijay Shekhar Sharma, aims to achieve operating profit within a year by expanding online wealth management services, onboarding more merchants, and implementing cost-cutting measures through AI automation.
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