Zomato Cuts 500 Jobs Amid AI-Driven Shift in Customer Service

Under the Zomato Associate Accelerator Program (ZAAP), the company’s customer training initiative, approximately 500 employees have been laid off.

This move aligns with the company’s rapid transition towards quick-commerce, aiming to automate customer service through artificial intelligence (AI).

Unannounced Layoffs and Employee Reactions

Employees from ZAAP centers in Gurugram and Hyderabad were forced to resign without a formal layoff announcement. According to reports, affected employees received messages from senior managers stating they had been “identified as faulty based on data.”

They were subsequently logged out of the system and offered two months’ salary as compensation, without any notice period.

A former employee shared, “When I was fired, I was asked to leave with a smile so that other employees wouldn’t be disturbed.” The reasons provided for termination appeared vague and unfair.

Some employees reported being dismissed for arriving a few minutes late on a particular day, while others were criticized for their customer interactions.

The Role of “Nugget” in Layoffs

The layoffs coincided with the launch of Zomato’s AI-driven customer support platform, “Nugget,” which was in development for three years.

Nugget handles over 15 million monthly interactions across Zomato’s brands, including Blinkit and Hyperpure.

The platform is designed to streamline customer support by significantly reducing response times and has successfully managed 80% of queries without human intervention.

Reports indicate that Nugget’s AI-driven performance assessment system, which assigns “karma” scores such as Gold or Iron, played a role in termination decisions.

This raises concerns regarding the fairness and accuracy of AI-based evaluations. While AI integration aims to enhance efficiency, its inability to fully grasp context may lead to unintended consequences.

Balancing automation with human oversight remains crucial for fair evaluations and job security.

Financial Growth Amid Job Cuts

Zomato’s annual report for FY24 indicated a 34% increase in its workforce, reaching 8,244 employees, up from 6,173 in FY23.

However, despite this growth, the company reported a consolidated net profit of Rs 59 crore for Q3 FY25, reflecting a 57% decline compared to the Rs 138 crore profit in the previous year’s corresponding quarter.

On the other hand, revenue from operations saw a notable rise, increasing to Rs 5,405 crore from Rs 3,288 crore year-over-year.

Employees Express Discontent

News of the layoffs first surfaced on March 25, when an affected employee took to Reddit, sharing his frustration over what he deemed an unfair termination.

He claimed to have been fired for being late by an average of just 28 minutes over three months. He further alleged that at least 300 employees were terminated alongside him without any prior warning or opportunity to improve their performance.

“No warning, no opportunity to improve—just a cold termination, despite having excellent metrics, a great track record, and a strong presence on the floor,” he wrote.

He expressed disappointment over Zomato’s approach, criticizing the company for disregarding employees’ efforts and dedication.

Another former employee echoed similar sentiments, stating that over 500 individuals were treated as “disposable parts.”

Posting under the username “be_vocal_” on Reddit, he described how employees were promised career growth, including promotions, salary hikes, and job stability. However, they were abruptly dismissed without any accountability.

The Corporate Layoff Cycle

The ex-employee also highlighted broader concerns about corporate treatment of employees, stating, “It’s a corporate playbook. Hype up employees with big dreams, extract maximum effort, then replace them like disposable parts. A new batch will come in, fed the same lies, and the cycle continues.”

Zomato’s Hiring and Termination Pattern

According to reports, Zomato had recruited approximately 1,500 employees under the ZAAP program for customer support roles.

The program promised potential career progression into various departments such as sales, operations, program management, support, supply chain, and category teams within a year.

However, many of these contracts were not renewed, leaving employees jobless despite initial assurances of career growth.

Lack of Official Response

Zomato has yet to issue an official statement regarding the layoffs. The company also did not respond to a request for comment sent on March 26 by HT.com.

As AI-driven automation reshapes customer service, concerns over job security and fair employment practices continue to mount. The recent layoffs at Zomato highlight the need for companies to strike a balance between technological advancements and employee well-being.