Zomato Cuts 600 Jobs Amid Automation Push and Quick Commerce Competition

Food delivery giant Zomato eliminated 600 positions on April 1, 2025, as the Indian company accelerates automation initiatives and navigates intensifying competition in the quick commerce sector. The workforce reduction affects multiple departments across the company's operations, marking one of the most significant layoffs in the food-tech industry this year.

The layoffs represent approximately 8% of Zomato's total workforce and come as the company shifts resources toward automated delivery systems and artificial intelligence-driven operations. Industry sources indicate the restructuring aims to streamline costs while positioning Zomato to compete more effectively against rivals in the rapidly evolving quick commerce market.

Context of the Decision

Zomato's workforce reduction stems from the company's strategic pivot toward increased automation and the mounting pressure from quick commerce wars in India. The food delivery platform has been investing heavily in technology solutions to reduce operational costs and improve delivery efficiency. This includes automated order processing, AI-powered demand forecasting, and robotic fulfillment centers.

The competitive landscape has intensified significantly, with players like Swiggy, Amazon, and newer entrants like Zepto and Blinkit expanding their quick commerce offerings. These platforms promise delivery times of 10-30 minutes, forcing traditional food delivery companies to reimagine their operational models. Zomato's decision to reduce headcount while investing in automation reflects the industry's broader shift toward technology-driven efficiency.

The company has also faced pressure to achieve profitability after years of cash-burning growth strategies. Rising inflation, increased delivery costs, and changing consumer behavior post-pandemic have compressed margins across the food-tech sector.

Impact on Operations

The layoffs primarily affected Zomato's customer support, marketing, and operational roles across major Indian cities including Delhi, Mumbai, Bangalore, and Hyderabad. Technology and engineering teams remained largely intact, reflecting the company's focus on maintaining its technical capabilities while reducing operational overhead.

Customer service functions saw the most significant cuts as Zomato implements chatbot technology and automated support systems. The marketing department also experienced reductions as the company shifts toward performance-based digital advertising and reduces traditional marketing spend.

Regional operations teams in tier-2 and tier-3 cities were affected as Zomato consolidates its geographic focus on high-performing metropolitan markets. The company plans to maintain service levels through improved route optimization and automated dispatch systems.

Company Financial Background

Zomato went public in July 2021 with a valuation of $12 billion, becoming one of India's largest food-tech IPOs. However, the stock has faced volatility amid concerns about profitability and intense competition. The company reported its first quarterly profit in Q1 2023 but has struggled to maintain consistent profitability.

Recent financial results showed revenue growth of 71% year-over-year, reaching $1.1 billion in fiscal 2024. However, the company's adjusted EBITDA margins remain thin at approximately 2-3%. The quick commerce segment, while growing rapidly, requires significant capital investment in dark stores and inventory management.

Zomato has raised over $2.1 billion in funding since its inception, with major investors including Ant Financial, Sequoia Capital, and Info Edge. The company's cash position remains strong with approximately $1.8 billion in reserves, providing runway for strategic investments despite the current restructuring.

Industry Outlook

The restaurant discovery and ordering sector in India continues expanding, with the market expected to reach $15 billion by 2026. However, companies face increasing pressure to demonstrate sustainable unit economics while competing on delivery speed and selection.

Quick commerce has emerged as the primary battleground, with players investing billions in infrastructure and technology. Zomato's main competitor Swiggy recently raised $700 million specifically for its quick commerce vertical, while Amazon continues expanding its grocery delivery services.

The industry trend toward automation and AI-driven operations is accelerating, with companies seeking to reduce labor costs while improving service quality. This technological shift is reshaping workforce requirements across the sector.

Conclusion

Zomato's workforce reduction signals the company's commitment to operational efficiency and technological advancement in an increasingly competitive market. While the layoffs present short-term challenges, the strategic focus on automation positions Zomato to compete more effectively in the quick commerce space. The company's ability to execute this transition while maintaining service quality will determine its success in India's evolving food delivery landscape.