Zomato Lays Off 500 Customer Service Employees Amid AI Automation, Food Delivery Slowdown

Zomato has laid off around 500 employees from its Zomato Associate Accelerator Program (ZAAP), a customer service training initiative launched last year, amid slowing growth in the food delivery market and an effort to automate customer service with artificial intelligence.

The layoffs follow the launch of ‘Nugget’, an AI-powered customer support platform developed in-house over three years. Nugget now handles over 15 million monthly interactions across Zomato’s platforms, including Blinkit and Hyperpure, and resolves up to 80% of customer queries without human intervention.

Former and current employees of Zomato said that ZAAP staff in Gurugram and Hyderabad were forced to resign without any formal layoff announcement.

Read: Zomato Becomes 'Eternal' Post MCA Approval: Is Blinkit Behind the Name Change?

Zomato did not comment on the issue till the time of publishing. This article will be updated if and when we receive a response. 

Riya (name changed), a current employee in the ZAAP, explained the modus operandi of the layoffs saying that employees get a message from a senior manager on Slack saying they have been identified as "faulty" based on data. They are immediately deactivated from Slack and offered two months' salary as compensation with no notice period. 

“More than 500 employees have been fired from Gurgaon and Hyderabad offices. Some employees received two or three warning emails before being terminated. But recently, employees were fired without any prior notice or warning,” said a former employee. 

“When I was fired, I was asked to leave with a smile so that other employees wouldn’t be disturbed,” he added. 

Ex employees also highlight that the reasons for the firing are often vague or unfair. Some were fired for minor attendance issues, while others were let go due to AI-generated performance assessments.

Meanwhile, some were told they had been late by a few minutes on a particular day, others were criticised for past customer interactions, and some were even terminated for allegedly not maintaining a "good relationship" with their manager. 

“It was nothing more than a cover-up for mass layoffs,” alleged a former employee. 

Employees said reasons for termination were often vague — including minor attendance lapses, past customer interactions, or strained relationships with managers. Some allege Nugget’s AI-driven performance assessments, which assign “karma” scores like Gold or Iron, played a role in dismissal decisions.

“Get an ‘Iron Karma’ and you’re out,” said a former employee. “The AI doesn’t even understand email or voice call context, yet it’s judging our performance.”

For instance, if a customer submits an incorrect claim, the employee responds by requesting a valid submission. However, if the customer, frustrated by the denial, leaves a poor rating, the AI fails to account for the context. Instead, it interprets the low rating as poor performance, leading to unfair evaluations and challenges for many employees.

Meanwhile, several staff working in ZAAP said they are dealing with stress amid the uncertainty of their jobs. 

“It’s been very stressful. I even told my parents that if I came home earlier than usual, it would mean that I got fired. My parents were okay with it, but I am not. It’s frustrating to see this happening, especially when employees are being dismissed unfairly,” said an employee who has been working with the ZAAP team.

At the end of FY24, Zomato's headcount grew by 34% to 8,244 employees, up from 6,173 in FY23, according to the company’s annual report.

The food delivery giant reported a consolidated net profit of Rs 59 crore Q3 FY25. This was a 57% decline from Rs 138 crore profit that was reported by the company in the same quarter previous year. Meanwhile, the company’s revenue from operations saw a strong year-over-year growth, rising to Rs 5,405 crore from Rs 3,288 crore.