Zomato lets go of 500 staff amid shift to AI

Zomato has laid off at least 500 employees from its customer service training initiative, the Zomato Associate Accelerator Program (ZAAP).

The move comes amid the company’s efforts to automate customer service operations through artificial intelligence (AI) to cut costs and improve efficiency.

Most affected employees were based in Gurugram and Hyderabad, with former and current employees alleging that layoffs were effected without formal announcements or warnings, according to Outlook Business, which first reported on the development.

A Zomato spokesperson declined to comment on the layoffs.

Launched last year, the ZAAP program hired about 1,500 employees for entry-level customer support roles with potential advancement opportunities in areas such as sales, operations, and program management. However, many of these contractual workers were not offered renewals at the end of their one-year tenure.

A current ZAAP employee told Outlook Business that the employees got a message from a senior manager on Slack saying that they are “faulty, based on data.”

They were then removed from Slack and given two months’ salary as compensation without any notice.

“More than 500 employees have been fired from Gurgaon and Hyderabad offices. Some employees got two or three warning emails before being terminated, but recently, many were fired without any warning,” a former employee told Outlook. “When I was fired, I was asked to leave with a smile so other employees wouldn’t be disturbed.”

The layoffs come amid Zomato’s strategy to streamline its customer support services with its in-house developed AI-powered platform, Nugget, which was launched more than a month ago.

The AI now handles over 15 million monthly interactions across Zomato platforms and resolves about 80% of customer queries without human intervention.

Zomato reportedly cited performance issues, including low punctuality and AI-generated performance assessments, as reasons for the termination.

Nugget’s AI-driven assessment system assigns “karma” scores, such as Gold or Iron, to employees based on their performance, the Outlook Business report said.

In a Reddit post, a former employee called the termination “ridiculous and unfair.”

“Today, I was fired from Zomato for what I can only describe as a ridiculous and unfair reason: being late by an average of just 28 minutes over the past three months,” the worker wrote on Reddit. “Zomato showed zero willingness to listen or give even a single chance for improvement.”

Zomato’s push towards automation comes as the company faces slowing growth in its core food delivery business and increasing losses at its quick commerce platform, Blinkit.

The employee count at the foodtech firm, which reported a steep decline in net profit in the October-December quarter, rose 34% to 8,244 employees at the end of FY24 from 6,173 the previous year.

The company reported a consolidated net profit of Rs59 crore for Q3 FY25, down from Rs138 crore a year ago.