Due to a lack of funding, startups have fired about 15,000 workers so far in 2023. As a result, as businesses look to reduce costs by increasing efficiency and incorporating AI capabilities, there may be further layoffs the next year.
The trend appears to have started before the year is out, as Paytm announced on Monday that it has lowered the number of employees in its operations and marketing teams by 10-15% through the use of AI-powered automation in their workflows.
According to a corporate spokesman, “We are transforming our operations with AI-powered automation to drive efficiency, eliminating repetitive tasks and roles to drive efficiency across growth and costs, resulting in a slight reduction in our workforce in operations and marketing.”
Although the firm did not say how many workers were impacted by the layoffs, reports place the figure at 1,000 throughout the operations, engineering, and sales departments. Founder Vijay Shekhar Sharma stated in a recent interview with Bloomberg that in order to grow the wealth management sector, he intends to engage around 15,000 contract salespeople.
Paytm aims to achieve positive cash flow following its successful turn around of Ebitda in Q4FY23. One97 Communications, the company’s parent, reported losses of Rupees 292 crore in its most recent Q2 earnings report, down from Rupees 571 crore in Q2FY23.
Similar to Paytm, the majority of companies are currently concentrating on changing from a high cash-burn model to a more lean and efficient business structure, with the goal of achieving sustainable development, given that venture capital and private equity investments have dropped to a level that is five years below in 2023.
Unlike the 2021 financing boom, when a flood in liquidity led to easy money and sky-high valuations, investors are now seeking for companies with strong business fundamentals and reasonable valuations.
This year, the valuations of some firms that had raised capital at exorbitant prices in 2021 have decreased; one such startup is the struggling ed-tech major Byju. Given the further tightening of the funding environment, the valuation collapse of these highly valued businesses may persist into the following year.
Businesses in a variety of sectors are aiming to use AI-powered capabilities to optimize operations at this particular time. While generative AI-based consumer apps, like OpenAI’s ChatGPT, were all the rage in 2023, enterprise applications of generative AI might become more and more popular in 2024.
