A case study on Zomato

EXECUTIVE SUMMARY

This case will talk about the recent layoffs by the Zomato of their 541 employees across its
customer.merchant and delivery partner support teams . there was a second round of layoff with in a
san of a month ,where they laid off 6 emloyees

What was the reason that caused Zomato firing so many employees? How they have encountered the
situation ? Was the decision taken by Zomato was right or they could have applied any alternate
solution to such situation

STATEMENT OF THE PROBLEM : ( Zomato fires 540 employees ! )

In one of its largest firing rounds in September 2019, Zomato,the online food delivery and restaurant
discovery platform,has laid off 540 employees as its Gurugram office about 10 per cent of the overall
strength at its head office in india . The company has fired employees from its teams across customer,
delivery and merchant support segments. The company had also fired 60 employees from its customer
support team in August 2019.

The development comes close on the heels of food delivery platforms, including Zomato and Swiggy,
being accused of unfair and anti-competitive practices by thousands of restaurant partners. The food
delivery company has given two-four months of severance package to the employees who have been
sacked. Over the last few months, improvement in its technology interface across functions has led to a
reduction in support-related queries; this has led to several roles becoming redundant, prompting the
company to layoff employees.
Zomato had earlier laid-off close to 300 employees in early 2015, or 10% of its staff, due to cost-cutting.
The food delivery market in India has exploded in the last few years, with ordering apps such as Swiggy,
Foodpanda, Zomato and UberEats gaining popularity among customers. However, the burn rate for
fulfilling these orders is also very high. Zomato claims to fulfil 40 million monthly orders in India
currently.

The aggregators together employ over 4 lakh-plus riders. However, riders or delivery boys are mostly
contract employees, who are not directly employed by companies.

The layoffs come at a time when Zomato, along with Swiggy, are struggling to negotiate fair better terms
and conditions with restaurant partners after the National Restaurant Association of India (NRAI) wrote
to large food aggregators last month alleging unfair and anti-competitive practices followed by such
companies. which they claim were hurting business for eateries.

Where on other hand, Zomato officials said, "Over the last few months, we have seen our technology
products and platforms evolve and improve significantly. While the business has continued to grow
consistently, this has led to an overall reduction in direct order-related support queries. We have
dramatically improved the speed of service resolution, now only 7.5% of our orders need support (down
from 15% in March)," Zomato said, reported the daily. After the current round of layoffs, Zomato's total
employee strength stands at 5,000. Apart from layoffs across customer, delivery and merchant support
segments, Zomato also hired around 1,600 employees in 2019, including 400 off-roll people, said the
company.

Food delivery companies, particularly Zomato, are at loggerheads with restaurant partners over
aggressive discounting and predatory pricing. The issue had recently led to hundreds of restaurants in
Delhi, Mumbai and Gurugram pulling out of the popular Zomato Gold programme amid growing unrest
between the restaurant industry and online ordering platforms.

Zomato Gold, which offers complimentary food and drinks to diners, has 1 million subscribers and
around 6,500 restaurant partners. After several rounds of meetings with restaurant owners, Zomato had
come up with a modified Gold programme in August. However, post the 'logout movement', Zomato
asked them to serve a 45-day notice period before logging out, but it's not clear how many of them are
listening.

LIST OF CRITICAL FACTORS :

The Logout movement was started on August 14 when 300 restaurants under NRAI started a twitter
campaign with the hashtag #Logout to announce that they were delisting themselves from platforms
such as Zomato Gold, EazyDiner, Dineout's Gourmet Passport, Nearbuy, MagicPin among others.

The main pain point between NRAI and Zomato has been the very successful Zomato Gold programme,
which offers one-on-one offers on food and drinks to dine-in customers at partner restaurants. In
September, Zomato diluted the programme but introduced the Gold offering on delivery as well, which
led to further discontent among NRAI members.
The Federation of Hotel and Restaurant Association of India (FHRAI), one of the biggest body of the
hotel industry in India that comprises over 27,000 members, has extended its support to the 'Logout'
movement initiated by the National Restaurant Association of India (NRAI). Along with FHRAI, several
other associations such as Thane Hotel Association, Pune Restaurants and Hotel Association (PRAHA),
Vadodara Food Entrepreneurs (VFE) have also joined the movement.

While it started as a fight against deep discounts offered by online aggregators, it has been reduced to
restaurants versus Zomato fight. Rather than rolling back its Gold programme for diners, Zomato has
introduced it in delivery as well leading to this flare up. Anurag Katriar, president of NRAI, says reasons
for two national bodies to come together is to not let Zomato dictate the terms of operation. He said
while other aggregators have agreed to renegotiate and come back with new terms of operation,
Zomato has not relented.

"We want to keep the reigns of our business in our hands. Zomato is a marketplace that purely connects
buyers and sellers online. It cannot decide discounts on our behalf," Anurag Katriar, president, NRAI
said.

"Our group will not hesitate in embarking on a nationwide agitation and resistance against Zomato and
others if its demands are not met within a stipulated timeframe," said Pradeep Shetty, joint honorary
secretary, FHRAI.

There were some speculations about Firing of 541 employees on the name of Automation Activity at the
same time of #Logout movement. Where Zomato itself declared that there is growth in online orders. Is
the layoffs are strategic decisions to cope-up with the aftermath that will happen at the end of Logout
movement?

ASSUMPTIONS

The solution for such situation could be explained better with a concept called "Managing Organizational
Change" , "This year we have hired over 1,200 people in our non-delivery teams and another 400 off-
rolls positions. We have also created jobs for hundreds of thousands of delivery partners. We are still
hiring in our technology, product and data sciences teams." This states that there was no lack of job
opportunities in Zomato. However, there was lack of competency in employees due to advancement in
technological approach

SOLUTIONS FOR THE QUESTION IN THE CASESTUDY

 To extend 2-4 months of severance pay to employees laid off over the weekend.
  Improving employees' understanding of change.
 Increasing communication between management and employees.
 Identifying and mitigating risks.
 Enhancing employee satisfaction.
 Boosting trust between management and employees.
 Improving employee skills and proficiency through change-related training initiatives.

BEST SOLUTION :

The solution for such situation could be explained better with a concept called "Managing Organizational
Change"

In one of its statement to newspapers, Zomato representative said:

"This year we have hired over 1,200 people in our non-delivery teams and another 400 off-rolls
positions. We have also created jobs for hundreds of thousands of delivery partners. We are still hiring
in our technology, product and data sciences teams."

This states that there was no lack of job opportunities in Zomato. However, there was lack of
competency in employees due to advancement in technological approach.

Change management is the systematic approach and application of knowledge, tools and resources to
deal with change. It involves defining and adopting corporate strategies, structures, procedures and
technologies to handle changes in external conditions and the business environment. Effective change
management goes beyond project management and technical tasks undertaken to enact organizational
changes and involves leading the "people side" of major change within an organization. The primary goal
of change management is to successfully implement new processes, products and business strategies
while minimizing negative outcomes.

Zomato fired the employees across its customer, merchant and delivery partner support teams. Rather
than giving them payout for 2 months they would have asked them to enhance their technical
competencies and enrolled them in tech support department. Since the technical enhancement was
done to improve customer service, these people could have been better assets if their tech skills were
sharp, rather then hiring people from outside. This could have resulted in laying off lesser number of
employees.

Swot Analysis

SWOT analysis is a technique that looks for the following things in a startup and based on it few
conclusions are made.

1. Strength

2. Weakness

3. Opportunities

4. Threats

Many conclusions were done from Zomato SWOT ANALYSIS.

Strengths

1. First mover advantage: One of the most upper hands of Zomato is that it is the underlying mover in a
large number of the countries where it is building up itself. Catalogues and various types of café
appraisals may exist. Be that as it may, as an application Zomato is remarkable and numerous nations
(like India) have cherished the ease of use of the Zomato application.

2. Evergreen exchange: The café exchange is partner evergreen exchange. Of course, there is likewise
retreats and elective downturns which may impact the business. Be that as it may, generally speaking,
this industry is going to remain around consistently and is basically going to develop with rising
discretionary cash flow.

3. Fast expansion: It's thankful that Zomato has turned out to be progressively broad brisk. It is as of
now in twenty four nations and is expanding year on year.

4. Fantastic structure of the application: Zomato has oftentimes won honours for its application plan and
for its easy to understand nature. The App configuration is shocking and it causes you find eateries close
by just as in the region which you are going to visit.

5. Number of clients: Zomato has a high number of clients utilizing their application. Simultaneously, the
site additionally has ninety million guests every month approx. With such a significant number of clients
Opportunities

1. Further development: The number 1 open door for Zomato to develop is to more nations and set up
its base speedier. Administration industry has a noteworthy interfered with that administrations can be
replicated quick and absolutely. Accordingly, it is significant for Zomato to build up and develop itself
quicker.

2. More acquisitions: There are and were numerous little open in this space. Zomato can obtain a
significant number of its rivals and simultaneously, it needs to keep a look on the tech organization and
addition any tech development it can get its hands on to continue developing.

3. Cloud eateries: Zomato is thinking of the idea of Cloud cafés wherein eateries won't need to get a
physical space to really sell their nourishment items. Next to, they can sell from Zomato.

4. Creating a network: Zomato has a high after however the clients don't connect with one another.
Making a discussion and a network out of the clients officially following Zomato can be of a high
advantage for the brand.

5. Adoption of the web and smartphones: There is a high increment in the selection of Internet
crosswise over creating and immature regions also. Correspondingly, reception of cell phone has
likewise expanded. In this way an ever-increasing number of requests and research about cafés can
happen online rather than through physical visits

6. Excellent subsidizing accessible: Zomato has increased different rounds of financing throughout the
years and in light of the fact that it is presently so all around created in numerous nations, there is a
decent measure of subsidizing accessible for the application.

7. Multiple acquisitions: Zomato has increased various organizations the majority of which are
programming or innovation one-sided.

8. Already turning benefits: In April 2017, Zomato has picked up benefit in each of the 24 nations it was
working in. For an industry which is a beginning up and has so much subsidizing, it is an enormous thing
to turn beneficial aim many financed or businesses are as yet proclaiming misfortunes even following a
time of setting up.

9. Brand equity: Zomato is esteemed at $1.4 billion inside 7 years of establishing. That says volumes
regarding the vogue and love for the name.

10. Fantastic promoting: You can see Zomato working for its own retail disconnected just as on the web.
Its print promotions are humorous and cause a moment to associate with the general population. It is
solid on Social media retail and uses a mix of ATL and BTL methodologies to charm and hold clients.

Weakness
1. Security issues for the application: A noteworthy issue for Zomato in the past has been some
wellbeing issues because of which the application was hacked and in any event 17 million client’s
information was replicated. Such wellbeing issues are a bad dream for web ventures.

2. Still a ton of extension required: Considering that the application has set-up in 24 nations, there is
great development. And yet, the application has been set up 7 years back and with the measure of
financing available for Zomato, the extension can be much brisk. It is enabling different administrations
to create themselves in this specialty before it arrives at their region.

3. Word of mouth and Facebook registration: Besides such applications, in numerous spots informal still
bests applications and simultaneously, Facebook registration are a solid challenger wherein open
probably won't require Zomato. Hence, it is an application for early adopters however absolutely not for
slow pokes.

Threats

1. Google's blueprint module: One of the significant dangers Zomato faces right presently is the
Schema module of Google wherein google areas itself is getting in café counsel. Indeed, even
google landing page demonstrates the google maps page where you can chase for eateries
inside your territory. Google being such a major association, Zomato faces enormous challenge
from them.
2. Market adherents and challengers: In the administration business, it is tranquil to repeat the
achievement of another administration item or advertising. So also, showcasing adherents and
rivals can unhurriedly remove the piece of the pie of Zomato.

CONCLUSION :

Zomato fired the employees across its customer, merchant and delivery partner support teams. Rather
than giving them payout for 2 months they would have asked them to enhance their technical
competencies and enrolled them in tech support department. Since the technical enhancement was
done to improve customer service, these people could have been better assets if their tech skills were
sharp, rather then hiring people from outside. This could have resulted in laying off lesser number of
employees.