Online food ordering firm Foodpanda India has reportedly cut nearly 500 jobs and shut down delivery operations in as many as six cities.
Foodpanda's layoffs come at a time when other players in the online food delivery space are taking up similar restructuring measures. Last month, Mumbai-based online food-ordering startup TinyOwllaid off 112 employees in just three months after cutting 160 jobs in September.
Foodpanda will discontinue food delivery operations in six cities including Kolkata, Chennai, Nagpur and Coimbatore, from next month onwards, sources close to the developments told Mint.
In October, a report said that Foodpanda Group was planning to sell its Indian arm as the competition has become fierce in the food-ordering business. Founded in 2012, Foodpanda currently operates in 40 countries. It is facing intense competition from TinyOwl, Swiggy and Zomato in India.
While Foodpanda handles only 20% of total delivery orders on its own, the rest of the orders are delivered by vendors of restaurants listed on the site.
"As a result of the many technological innovations, we have achieved over 98% automation in order processing. This resulted in lesser manual interventions, thereby leading to surplus manpower, which was not benefitting the business or our people's careers," said Saurabh Kochhar, chief executive officer (CEO) of Foodpanda India.
"Therefore, unfortunately, we had to let go of around 250-300 people from our total manforce," he added.
Foodpanda has "disputed" the number of job cuts it has undertaken, while sources familiar with matter said that layoffs are close to 500.
"We have burnt through a lot of money this year on marketing and hiring; so, it is not surprising that Rocket Internet and Goldman Sachs have cracked the whip," said the source.
Foodpanda has raised funds worth nearly $310 million from the Samwer Brothers of Rocket Internet and Goldman Sachs.
"So we were 180 people in February 2015. Today, we are at 1,300-odd people. That's how fast we have grown. So these are not exact numbers but roughly we have fired 60 people in sales, 80 in vendor service, 10 in marketing, 20 in customer delight, 12 in finance, 5 in on-boarding, 25 in automation and about 250 people from the in-house call centre," the source explained.
Foodpanda's move to stop operations in the six cities will result in delivery boys, who are not on its payrolls, losing jobs. The delivery is outsourced to contractors.
"Foodpanda has reduced overall work force by about 15% over the last months," said Ralf Wenzel, co-founder and CEO of Foodpanda (global).