Foodtech giant Swiggy will lay off 1,100 employees citing business losses because of the lockdown to contain the coronavirus, two days after rival Zomato revealed plans to cut 13 per cent of its workforce. The company backed by China’s Tencent and Prosus NV has about 8,000 employees and it is reducing 13.75 per cent of its workforce.

“We, unfortunately, have to part ways with 1100 of our employees spanning across grades and functions in the cities and head office over the next few days. This is easily the hardest and longest deliberated decision the management team and I have been faced with over recent times,” said Swiggy co-founder and CEO Sriharsha Majety in a blog post. “We have been fortunate to have some of the brightest missionary talent in the country join us over the last few years, and I would like to state unequivocally that this is not at all a reflection of anyone’s performance.”

Majety said the firm had started chalking out an accelerated path to profitability for the food delivery business last December. “We had also started making great progress on our unit economics over the following months before Covid hit us.”

He said Covid-19 hit the company with a huge blow of uncertainty, forcing it to look even harder at its cost base and preparedness for the road ahead. While Covid might have long-term tailwinds for the delivery business and digital commerce when things settle eventually, he said nobody knows how long the uncertainty will last. “We, therefore, need to be prepared to see through this winter, to emerge stronger on the other side.”

Early this month, Rahul Jaimini, the co-founder and CTO of Bengaluru-based Swiggy, said he is moving away from his active role to pursue another entrepreneurial venture.

Swiggy recently said its investors continue to put their trust in the company’s leadership and their ability to execute towards the larger goal and the recent round of funding of $156 million will further strengthen and expand services that offer unparalleled convenience to consumers.

Swiggy has raised a total of $1.6 billion in funding over 12 rounds from investors such as China’s Tencent Holdings, Meituan-Dianping and Prosus N. V. The other investors include Ark Impact, Korea Investment Partners and Samsung Ventures.

“While we are very fortunate to have raised capital just before Covid hit and have sufficient runway today, it is incredibly important to prepare for worse scenarios in the macro environment and make sure we are protected,” said Majety.

Over the next few days, the human resources team along with the line manager will have a one-on-one conversation with impacted employees providing further details regarding the next steps and clarifying any questions they may have. All other employees will receive appropriate communication from their line managers regarding the continuity of their role with Swiggy.

All impacted employees will receive at least 3 months of salary irrespective of their notice period or tenure.

For every year they have spent with Swiggy, the firm will be offering an extra month of ex-gratia in addition to their notice period pay, working out to between 3-8 months of salary depending on the tenure. For example, if someone’s notice period is 3 months and they’ve spent 5 years with the company, they will get 8 months of salary.

Many team members had preferred ESOP (employee stock ownership plan) to cash at the time of joining. While Swiggy’s standard ESOP policy has a 1-year cliff and annual vesting, it will now be extending ESOP vesting to the nearest quarter (including the months of the notice period) and waive off the 1-year cliff for those who have not completed 1 year.

The firm will provide medical insurance cover for them and nominated family members till 31st December 2020. Additionally, it will also be providing insurance cover for their parents. It is providing a ‘wellness assistance programme’ to ensure the physical, emotional and mental and financial well-being of impacted employees and their families. This includes tele and video consultation access to experienced doctors, counsellors and financial advisors till 31st December 2020. Swiggy has also set up a dedicated and fully-trained talent acquisition team assisting impacted employees round the clock in identifying suitable opportunities and providing necessary career support for the next 3 months.