In an attempt to deal with the impact of the Covid-19 pandemic, Zomato has announced that they are laying off 13% of their staff and salary reductions across the organisation. While Goyal said that Zomato is financially stable, they still need to preserve as much cash as possible to weather the storm.
The company has proposed lower salary cuts for people with lower salaries, and higher cuts (up to 50%) for people with higher salaries.
“We expect these cuts to be discontinued as soon as the economy starts getting back on track. I foresee (and hope) this to be around 6 months from now,” Goyal wrote in a blog post titled ‘A more focused Zomato’.
Speaking about laying off the workforce, Goyal wrote - “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.”
Here’s an excerpt from the note Goyal sent all Zomato employees. You can read the whole note here.
"Our financial runway looks solid
Our burn rate is significantly down from pre-COVID levels. We have enough capital to continue growing our business – are financially stable and have a very generous amount of runway in the bank (which is continuing to improve as we bring our burn rate down).
We remain committed to growing towards our mission at the same pace as before. We will continue to hire people in areas where we need them the most – primarily in product and engineering.
We are, however, going to prepare ourselves for things getting worse
COVID-19 has been a black swan event for the world economy; and we do not yet know if we have hit the global minima in this journey with the virus. What we have seen so far might just be the local minima, and the worst might be around the corner.
Therefore, we need to make sure that we preserve as much 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.
Reducing real estate costs
Our highest recurring expense today (outside of payroll) is real estate. We have 150+ offices globally, most of which are spaces for our sales & logistics teams. Given how well we have been working from home, we have decided to make partial or full work from home a permanent feature of our lives. Depending on the team you are in, you may have –
- Full time work from home or at the field (e.g., for sales teams, office presence is only required for large team meetings, gatherings, performance reviews)
- Part time work from home (some days in office, other days at home)
- Work from office (all days in office)
We will chat more about this in our upcoming global townhall.
Temporary reductions in pay
I thank everyone who volunteered for pay cuts to support our longevity as a business. So many people have volunteered for a 100% pay cut for at least 6 months – that is something I wouldn’t expect to happen at many other companies. 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.
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.
We expect these cuts to be discontinued as soon as the economy starts getting back on track. I foresee (and hope) this to be around 6 months from now. We will speak about this in more detail during the upcoming global townhall.
Some tough people calls
Multiple aspects of our business have changed dramatically over the last couple of months and many of these changes are expected to be permanent. 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.
Over the next couple of days, GG, MG and I will be getting on video calls with impacted employees to walk them through the next steps and help find them jobs as soon as possible. We are going to assure them that we stand by them, and will financially and emotionally support them to the fullest possible extent.
How are we going to support these Zomans?
Our support covers 4 key vectors – financial support, outplacement support, healthcare and equity.
1. Financial support
All our employees who no longer have any work at Zomato, will continue to be with us at 50% salary for the next 6 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.
Some impacted employees work with us through manpower agencies and not directly on our payroll. We are going to help these agencies support these employees with two months of severance (vs. 15 days of contractual obligation).
Each person leaving us will also be allowed to keep their Zomato issued laptops and phones (if any).
2. Outplacement support
I, our recruitment team and some other key people, will work as an outplacement team to help impacted people look for jobs.
3. Equity
Previously allocated ESOPs will continue to vest during this period of 6 months, as all these people will remain on our payroll with reduced pay.
4. Health Insurance and Support
We will ensure that the current health insurance, wherever provided by Zomato continues for this period along with access to our in-house mental wellness team.
All benefits from Zomato will lapse as soon as you find another job, or after 6 months, whichever is earlier.
How will you know whether you have been impacted?
For everyone who is impacted – you will get invites for a zoom call with the leadership team within the next 24 hours. These invites will be sent to you via email and Dingtalk.
For everyone who is not impacted – an email from hr@zomato.com in the next 6 hours should tell you that your jobs are here to stay.
To everyone who is impacted, I assure you that we have already explored every possible option of retaining your roles, or creating new roles for you. Also, short term cost is not a decision driver here; this will however, end up making Zomato leaner, and improve our chances of success in the long term.
I thank you for your time and commitment towards building Zomato. You have helped make Zomato what it is today. All of Zomato is grateful to you, and is going to do its absolute best to ensure that this is a smooth transition for you.
Zomato will always be home for you – and I wish we continue to enrich your life – as customers, as well as external custodians of our mission of better food for more people.
As always, please reach out to me directly for any ideas, questions or concerns.
– Deepi"
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