Daybreak - Employees are feeling the squeeze as Swiggy preps for its stock market debut

Episode Date: April 26, 2024

A damning investigative report about Swiggy recently revealed how the foodtech giant has been depriving its delivery workers of their health insurance coverage if their ratings fall. It comes at a time when the company is prepping to make its stock market debut to raise more than a billion dollars. Earlier this week, Swiggy  also got the official green flag for the IPO from its shareholders.But so far, only its food delivery business is profitable. So now, the company is running on overdrive to hit profitability before it goes public. And Swiggy employees are bearing the brunt. Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too? It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. A damning report came out earlier this month about the food tech giant Swiggy. The investigative report by the rest of the world revealed how it has been depriving its delivery workers of their health insurance coverage if they make lesser deliveries or if their ratings fall.

It's basically a dynamic rating system where the higher the rating, the better their insurance coverage, and if their rating falls, certain benefits are taken away. Now, India has over 8 million gig workers and the number is expected to double in the next couple of years. And yet, there are barely any policies in place to protect them against the whims and fancies of the platforms that they work for. This report about Swiggy comes at a time when it's prepping for an IPO. The company wants to raise more than a billion dollars through its public offering. And for this, it is going by a valuation of nearly $12 billion.

In fact, earlier this week, Swiggy actually got the official green flag to carry on from its shareholders. But you see, Swiggy as a whole is still not profitable. It was only its food delivery business that finally turned green last year. So naturally, the company with all its verticals wants to become profitable this year before it goes public. It is on overdrive mode currently. And the load is on Swiggy employees. So today, I thought it's a good time to take you to revisit a previous episode of Daybreak

where we spoke about how the IPO preparation is affecting Swiggy employees. Welcome to Daybreak, a business podcast from the Ken. I'm your host Nick Dha Sharma and I don't chase the new cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Also, just so you know, daybreak episodes are also dropping on Tuesday with my brand new co-host Rahel Filippos. Today is Friday, the 26th of April.

targets targets targets it's all about daily weekly and monthly targets in swiggy offices right now for example on the revenue side category teams have been given larger targets like increasing orders and average order value or improving the market share on a city level and then there are other sub-targets and this time the leadership is way more involved with meeting these targets an employee of swiggy spoke to my colleague, the Ken reporter, Ayusha Garval, and they told him that now vice president and senior vice president level bosses are handling things that used to be earlier taken care of by those who were at the business head level. And how does this help? The idea basically is to close any pending or new matters stuck due to lack of coordination faster by quickly aligning their

respective teams. For employees, this means there is little or no room for everyone. In fact, another employee told us that in some cities, especially where Zumato is big, teams have been pulled up for underperformance for a three-hour dinner slot. Earlier, this wasn't even being done for the entire day's performance. In the last seven or eight months, some employees have also been nudged to quit by being put on performance improvement plans. And then there is cost-cutting, of course. Swiggy is making no compromises there.

discounts and delivery partners onboarding and payouts, it's all being reduced monthly to the magic number that will help the company become profitable by March 2024. And not just that. The cost-cutting is also reflecting in appraisals. There were no hikes at Swiggy for the director and above levels and far fewer promotions. One of the employees that we spoke to on the condition of anonymity told us this. He is a mid-senior-level employee. In his head, he is a mid-senior-level employee. In his his category, the hikes were in single digits at best, which has never happened, not even in the pandemic years. Another area where Swiggy is tidying up before the IPO dinner party is how it is handling attrition. The need for hiring for vacant posts is being scrutinized at a much deeper

level. There now needs to be a business critical justification for hiring. For example, the key responsibility areas or KRAs of vacant roles are now clubbed. under existing roles across the organization, which means increasing deliverables for existing employees. So now you might want to ask who was the one directing all of this from behind the scenes? Stay tuned to find out. In August 2022, Swiggy hired Rohit Kapoor as the CEO of its food and marketplaces business. He came from Oyo, which is another soft bank backed unicorn. and he has the reputation of being a tough taskmaster known for his execution style.

He has a solid sales background. So in the first eight months of joining, he revamped teams and responsibilities in his division. And most importantly, he was the one who, along with other leadership, carried out the laying off of 6% of Swiggy's workforce, which was around 400 employees. And as rough as it may sound, this is actually what played a significant role in making Swiggy's food delivery business achieve profitability. And then Swiggy took things up a notch. In April this year, Swiggy, which handles over one and a half million orders per day, introduced a platform fee of two rupees for customers. And then it increased it by another rupee. So basically, three rupees in total.

Fun fact, also, Zomato started charging a similar fee after Swiggy started doing it. Talking about Zomato, there is one thing that Swiggy should have learned from it way before, but thankfully, finally, it has decided to pick up the ball on it now. That is its relationship with its restaurant partners. Zomato has always focused on it. One of the Swiggy employees that we spoke to told us, and I'm quoting him, we know from our conversations with Markey brands that they, that is Zomato, for two to three years, had direct conversations or lunches with Zomato CEO Dipinder Goel.

End quote. Swiggy, on the other hand, would have their area sales managers do this job. Kapoor wanted this to change for Swiggy. So, one of the employees told us that lately the management has been meeting up with the top restaurant owners and associations in Bangalore. He said that there is encouragement from the leadership at Swiggy to have more such virtual catch-ups, restaurant visits and participation in distributor forums for partners. Even the sales teams at the company are working more closely with restaurant partners to understand and solve their issues.

And this is especially important because with the IPO coming and their profitability goal, Swiggy cannot afford promotional spending and they also cannot push costs, on to the customers, especially after introducing the platform fee. Also, before I wrap this up, we need to remember that the food delivery business and even the grocery business is a low margins one. So if they don't solve these issues with their restaurant partners, then ultimately these costs will be passed on to you and I, the customers. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news

platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the ken.com and click on the red subscribe button on top of the Ken website. Today's episode was hosted by Snigda Sharma and edited by Rajiv CNN.