In the light of the COVID-19 lockdown phase which is affecting business on a global scale, Swiggy is cutting more than 1,000 jobs - mainly from its dedicated cloud kitchen service. For one of the most reputed Indian unicorn enterprises, this comes as a desperate measure to downsize and focus on the funds that are on their way to complete exhaustion.

The measure

In an announcement, Swiggy stated that it was now evaluating other ways to stay on their feet and focus on increasing the efficiency, growth and profitability across its kitchen operations.

According to an analysis made by LinkedIn, Swiggy employs about 12,000 people for its kitchen operations. Swiggy has also stated that while their efforts are exercised nation-wide, it might adversely affect the people associated with its kitchens.

Although Swiggy has not explicitly announced any layoffs, sources say that around 1,000+ jobs are under the threat of being laid off. Entrackr, an Indian news outlet that tracks the activities of start-up firms, first reported of such measures being implemented by Swiggy.

      It also aims to scale its monthly burn rate from $20 million to $5 million in the coming months. Most of its expenditure went into implementing initiatives to attract customers.

Swiggy's expansion drive a previous year

To keep up with its equally gargantuan competitor Zomato, Swiggy attempted a business diversification plan with the launch and expansion of cloud kitchens as an additional revenue Swiggy has established close to a 1,000 kitchens across India- far more than any of its local competitors.

Current condition

Swiggy, one of the leading Indian unicorns- raised a staggering $1.42 billion till this date, including a $156 million Series I funding round this financial year. It also faces serious heat from its competitor, Ant Financial-backed Zomato which is also negotiating a $500 million round by May-end.

Although the current food logistics market has been valued at $4 billion, it has now become a duopoly business due to meteoric growth rates posted by both Zomato and Swiggy. This duopoly resulted in Foodpanda (the food delivery arm of Ola) having to shift its marketing strategy to a whole other paradigm and Zomato acquiring Uber Eats.

Both Swiggy and Zomato have been struggling to cut down on their cash burn because one minor slip-up might mean losing the entire business to the other competitor. But on the revenue perspective, both of them are witnessing fewer orders being placed by their customer base- a sharp fall from nearly 3 million orders to less than a million orders now.

Conclusion

The fear of layoffs is slowly gripping not only those who are associated with nascent start-ups but even established unicorns and enterprises as well. The business has taken a massive hit due to the lockdown phase, and an air of serious uncertainty looms over the Indian start-up ecosystem.