Zomato Fires 500 Employees: In a recent effort to automate its operations, Zomato has terminated approximately 500 employees from its customer service teams in Hyderabad and Gurugram. According to reports, the AI-driven assessments were the basis for the redundancies, which were directed at employees who were engaged through the company’s Associate Accelerator Program (ZAAP). The employees who were affected were terminated without any formal notification, which has prompted questions regarding the company’s employment practices in terms of transparency and impartiality.
Layoffs Based on Artificial Intelligence with No Prior Notice
Zomato’s decision to reduce its workforce coincides with its integration of artificial intelligence into its customer service operations. According to reports, senior managers informed the affected employees that they had been “identified as faulty based on data.” Their authorisation to utilise internal communication platforms was terminated shortly thereafter. The abruptness of the decision left many employees in a state of astonishment, with some alleging that trivial infractions, such as arriving a few minutes late or being criticised for customer interactions, were used as justification for termination.
According to a former employee, “I was requested to depart with a smile in order to prevent any disruptions to my colleagues.” This underscores the absence of empathy in the termination process, which results in employees feeling undervalued and dismissed without a reasonable opportunity to defend themselves.
Customer support is now managed by an AI-powered “Nugget.”
The reductions are timed to coincide with the official launch of Nugget, Zomato’s AI-powered customer support platform. Nugget, which was created over a three-year period, is intended to automate and simplify customer interactions, thereby decreasing the need for human intervention in query resolution. The AI platform is currently responsible for administering 80% of customer service interactions across Hyperpure, Blinkit, and Zomato.
The AI-driven performance assessment system, which reportedly allocates “karma” scores—such as Gold or Iron—to employees based on their work performance, is one of the most contentious aspects of this transition. The impartiality and accuracy of AI evaluations were purportedly questioned as a result of the alleged use of these scores as a basis for dismissal decisions. Critics contend that AI’s inability to comprehend context could result in unjustified job losses, despite its potential to improve efficiency.
Ethical Concerns Regarding Artificial Intelligence in Workforce Management
The growing dependence on artificial intelligence (AI) to supervise human employees has prompted significant ethical concerns. Numerous individuals contend that AI is incapable of accurately assessing human performance, particularly in customer service positions that necessitate empathy, tone, and situational awareness.
The impartiality of the AI assessments has been a source of concern for employees who were terminated. According to certain individuals, the automation process does not consider the unique circumstances of each employee or permit them to challenge the decisions that have been made against them. This raises concerns regarding the potential for AI-driven management practices to result in pervasive employment insecurity in the future.
Zomato’s Expansion in the Face of Staff Reduction
Despite the reductions, Zomato’s workforce has experienced an overall increase. The annual report for FY24 of the company disclosed a 34% increase in headcount, from 6,173 employees in FY23 to 8,244 in FY24. Nevertheless, the financial performance of the company is ambiguous.
Zomato’s consolidated net profit for Q3 FY25 was Rs 59 crore, a 57% decrease from the Rs 138 crore profit recorded in the same quarter of the previous year. Nevertheless, revenue from operations increased significantly year over year, increasing from Rs 3,288 crore to Rs 5,405 crore.
The sustainability of Zomato’s business model is called into question by the declining net profit, despite the fact that revenue growth remains robust. This is particularly true given the company’s sustained investment in AI and automation.
Maintaining a Balance Between AI Automation and Human Supervision
Companies such as Zomato are confronted with the challenge of balancing automation with human supervision as AI continues to transform industries. Although tools that are powered by artificial intelligence (AI) such as Nugget can enhance efficiency and decrease operational expenses, they must be implemented with ethical considerations in mind. Transparent evaluation processes and opportunities to appeal AI-based assessments should be available to employees.
The recent reductions are a reminder that, despite the potential benefits of AI for business operations, its impact on the workforce must be meticulously managed. Maintaining employment security and fairness will be essential for a sustainable and ethical transition towards automation as more companies integrate AI into customer service..
At present, the abrupt termination of 500 employees raises concerns regarding the future of AI-driven workforce management and the necessity of more effective policies to safeguard workers in a world that is becoming increasingly automated. Source financialexpress
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