Tuesday, June 25, 2024
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HomeStocksPaytm May Cut 20% of The Workforce, Seeking To Reduce Employee Cost

Paytm May Cut 20% of The Workforce, Seeking To Reduce Employee Cost

Paytm is an Indian multinational financial technology company, that specializes in digital payments and financial services, based in Noida. The fintech company might be cutting around 20% of its workforce in the current financial year in order to reduce its employee costs.

Paytm Workforce Data

During FY23, the company maintained an average of 32,798 employees, with 29,503 actively engaged, at an average cost per employee of Rs 7,87,000. However, in FY24, total expenditure surged by 34% Y-o-Y to Rs 3,124 crore, with the average employee cost estimated to have increased to Rs.10,60,000.

In response to this increase in losses, Paytm has implemented an employee cost reduction plan aimed at saving Rs.400-500 crore. This initiative could potentially lead to a reduction of 5,000-6,300 employees.

Company’s Investor Presentation

The company in its investor presentation has mentioned the concerns regarding the increase in employee costs by stating, “In recent years, our employee costs have increased due to investments, primarily in technology, merchant sales, and financial services. For the coming year, while we continue to invest in the merchant sales team, as well as risk and compliance functions, we expect reductions in other employee costs.”

The company remains confident in cost-saving measures through the use of AI and operational focus, While it still prioritizes talent development by promoting high-performers and recruiting new senior executives to drive growth.

Near-Term Financial Impact on the Company

The Company is going to be impacted financially on a near-term basis on both revenue and profitability basis due to the disruptions faced by them in Q4 FY 2023-24 which includes the impact caused by the pausing of Paytm Payments Bank Limited wallet(PPBL).

Conclusion: Paytm’s proactive approach to cost reduction, using AI and operational efficiencies, highlights its commitment to financial sustainability but the impact of the recent ban on PPBL is going to stay for some time. By promoting internal talent and recruiting new senior executives, Paytm aims to strike a perfect balance between cost optimization and strategic growth of the company, which will ensure resilience in the market.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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