Zomato Layoffs: Sacks 600 employees as AI takes over customer service roles

Zomato, the food delivery company which once made headlines for its growing business footprints, has laid off around 600 employees from its customer support team as it turns to artificial intelligence to handle increasing customer service demands. 

The move follows the official rollout of 'Nugget, an in-house AI platform developed over the past three years, which is now managing more than 15 million customer interactions monthly across Zomato, Blinkit, and Hyperpure.

The layoffs affected staff members enrolled under Zomato’s Associate Accelerator Program (ZAAP), a customer service training initiative launched last year. Employees based in Gurugram and Hyderabad alleged that they were quietly forced to resign, often receiving Slack messages labeling them “faulty” based on AI-driven performance metrics, followed by immediate deactivation and an offer of two months’ salary without any formal notice.

While Zomato has not issued an official statement yet, current and former employees have raised concerns about the criteria used to assess their performance. Many pointed to the use of AI-generated “karma scores” with labels like Gold or Iron that seemingly determined their fate. A low rating like “Iron Karma” could result in automatic termination, they claimed.

The rollout of Nugget, designed to improve operational efficiency, has come at a time when Zomato is grappling with a slowdown in its core food delivery business and mounting pressure to cut costs. 

Although the company reported a INR 59 crore net profit for Q3 FY25, this marked a sharp 57% drop compared to the same quarter last year. Meanwhile, its revenue grew significantly, rising to INR 5,405 crore from INR 3,288 crore year-over-year.

The layoffs have triggered criticism online and reignited debates on ethical workforce management, especially in tech-driven sectors rapidly adopting automation. 

The situation raises a critical question, can the pursuit of efficiency through AI come at the expense of fairness and empathy in the workplace? As technology continues to reshape how companies operate, Zomato’s move highlights the growing tension between automation and humane workforce practices.