Why Did Zomato Lay Off Workers? Here’s What We Know

Employees are let go by Zomato after integrating AI.

For unclear reasons, Zomato laid off 500 workers in Hyderabad and Gurugram who had been hired under the ZAAP program. Zomato’s customer support division is automated by AI.

About 600 workers have been let go by Zomato as part of their customer training program, the Associate Accelerator Program (ZAAP). This choice was made in an effort to automate customer care through the integration of artificial intelligence, amid the swift transition towards quick-commerce.

ZAAP employees in Hyderabad and Gurugram were compelled to leave their jobs without being formally laid off, according to Outlook. An employee clarified that they received a communication from the senior management stating that they had been “identified as faulty based on data,” despite Zomato’s lack of formal response. They were then granted compensation in the form of two months’ salary without a notice period after being logged out of Messenger.

“When I was fired, I was asked to leave with a smile so that other employees wouldn’t be disturbed,” the former employee said. The abrupt firing was announced for unfair and ambiguous reasons. They were reprimanded for their customer service and fired for arriving several minutes late on a given day.

The layoffs coincide with the planned launch of Zomato’s “Nugget,” which took three years to develop. An AI-powered customer service platform called “Nugget” manages more than 15 million monthly interactions for Zomato’s brands, such as Blinkit and Hyperpure. It was created especially to maximise the time saved when a customer’s ticket is resolved. With no human involvement, Nugget has effectively handled 80% of enquiries.

According to reports, Nugget’s AI-powered performance evaluation uses “karma” values, such as Gold or Iron, to determine dismissal decisions. There are questions regarding accuracy and fairness when using AI to assess employee performance. Despite being made to increase efficiency, its incapacity to comprehend context could have unforeseen effects. Maintaining fair assessments and job security as businesses incorporate AI into customer service requires striking a balance between automation and human control.

Zomato’s annual report states that at the end of FY24, the company had 8,244 workers, up 34% from 6,173 at the end of FY23. The company’s Q3 FY25 consolidated net profit of Rs 59 crore represented a 57% decrease from the Rs 138 crore profit from the same period the year before. Nonetheless, it saw notable annual growth in operating revenue, rising from Rs 3,288 crore to Rs 5,405 crore.