Zomato, one of India’s leading food delivery and quick commerce companies, has laid off up to 600 employees from its customer support team, signaling tough times ahead for the food-tech giant. The company, now rebranded as “Eternal,” made this decision as it faces a slowdown in its core food delivery business and rising losses in its quick commerce arm, Blinkit. Sources close to the matter revealed that the layoffs, which took place over the past few weeks, aim to cut costs and streamline operations amid increasing reliance on artificial intelligence (AI) to handle customer service tasks.
The move has sparked concern among employees and industry watchers, raising questions about job security in India’s fast-evolving tech sector. Zomato, headquartered in Gurugram, declined to comment officially on the layoffs, leaving affected workers and analysts to piece together the reasons behind this significant workforce reduction.
A Shift in Strategy: Automation Takes Center Stage
Zomato’s decision to reduce its customer support staff comes less than a year after it hired around 1,500 people under its Zomato Associate Accelerator Program (ZAAP). Launched in 2024, ZAAP aimed to bring fresh talent into customer support roles with the promise of growth opportunities in areas like sales, operations, and supply chain management. However, many of these contractual employees did not see their contracts renewed, leading to the abrupt layoffs.
The company attributes this shift to its growing use of AI and automation. Zomato recently introduced “Nugget,” an AI-powered customer support platform developed over three years. Nugget now handles over 15 million customer queries each month across Zomato’s platforms, including its food delivery service, Blinkit, and Hyperpure, a B2B supply chain business. Reports suggest that the platform resolves up to 80% of customer issues without human intervention, slashing response times by 75% and reducing the need for a large support team.
“Zomato is leaning heavily on AI to cut costs and improve efficiency,” said a source familiar with the company’s operations. “This has made many customer support roles redundant, especially as the business faces pressure to stay profitable.”
Slowing Growth Hits Food Delivery
The layoffs arrive at a challenging time for Zomato. The company’s food delivery business, its biggest revenue driver, has hit a rough patch. A slowdown in urban consumption and difficulties expanding beyond India’s top cities have dented growth. In its latest earnings report for the third quarter of fiscal year 2025 (October-December 2024), Zomato’s profits dropped sharply by 57% to Rs 59 crore, down from Rs 138 crore in the same period the previous year. Analysts point to a “demand slowdown” as a key factor, with customers ordering less frequently amid rising inflation and economic uncertainty.
Despite the profit dip, Zomato’s revenue from operations rose by 64% year-on-year to Rs 5,404 crore in Q3, up from Rs 3,288 crore the previous year. This growth, however, has not been enough to offset the mounting costs and competitive pressures in the market.
Blinkit’s Losses Add to the Strain
Zomato’s quick commerce arm, Blinkit, has also played a role in the company’s financial challenges. Acquired in 2022, Blinkit delivers groceries and essentials in under 10 minutes, a service that has gained popularity in urban India. However, the business remains a cash drain. In Q3 FY25, Blinkit reported widening losses, putting additional pressure on Zomato’s bottom line.
The combination of a slowing food delivery segment and Blinkit’s losses has pushed Zomato to take drastic measures, including the recent job cuts. The company hopes that automation and operational efficiencies will help it weather this storm.
Employees Left in the Lurch
For the 600 affected employees, the layoffs came as a shock. Many took to social media to voice their frustration, alleging that Zomato terminated their jobs without prior notice. “We worked long hours and met our targets, only to be let go overnight,” wrote one former employee on Reddit. “Zomato promised us stability and growth, but now we’re out with just a month’s severance pay.”
The layoffs primarily impacted workers in Gurugram and Hyderabad, two of Zomato’s key operational hubs. Current staff expressed growing unease about their job security. “The atmosphere is tense,” said a customer support associate still with the company. “We don’t know who’s next.”
A Broader Trend in Tech
Zomato’s layoffs reflect a wider trend in the tech and service industries, where companies increasingly turn to AI to cut costs. From customer support to data analysis, automation is reshaping job roles and reducing the need for human workers. While this boosts efficiency, it also raises concerns about employment in a country like India, where millions rely on tech jobs for their livelihoods.
“Zomato isn’t alone in this,” said Priya Menon, a tech industry expert. “We’ve seen similar moves from global giants like IBM and HP, as well as Indian startups like Sharechat and Pocket FM. AI is a double-edged sword—it drives innovation but disrupts traditional jobs.”
For Zomato, the shift to AI has already shown results. Nugget’s ability to handle millions of queries has cut resolution times by 20%, a win for customers. Yet, the human cost of this transition has left a bitter taste for those affected.
Market Reaction and Future Outlook
Despite the layoffs, Zomato’s stock showed resilience. On April 1, 2025, its shares rose by 0.84% to close at Rs 203.20, suggesting that investors see the cost-cutting measures as a positive step. However, analysts remain cautious. Last month, BofA Securities downgraded Zomato’s rating from “Buy” to “Neutral,” citing concerns over food delivery growth and quick commerce competition.
The company has also approved a grant of 2,17,960 stock options to eligible employees, a move that could signal efforts to retain key talent amid the upheaval.
What’s Next for Zomato?
As Zomato navigates this slowdown, its leadership faces tough choices. CEO Deepinder Goyal has acknowledged “systemic issues” in the food delivery business, hinting at broader changes to come. Whether the company can regain its growth momentum while managing costs remains to be seen.
For now, the layoffs serve as a stark reminder of the challenges facing India’s tech giants. As Zomato doubles down on AI and automation, it risks alienating the very workforce that helped build its success. The road ahead will test its ability to adapt without losing sight of its human roots.
