PayU Finance, the non-banking financial company (NBFC) unit of payment service provider PayU, laid off around 100, or a third of its staff, on Tuesday, two people aware of the development told The Head and Tale.

Of the total employees asked to leave, 30 were from its Gurugram office and the remaining from its Mumbai and Bengaluru teams, the people cited above said. Notably, as many as 60 of the fired staff held managerial positions while the rest belonged to the telecalling team, one of the persons added.

The employees who were let go, including some staff who had joined just a month ago, were not given any reasons for the lay off, another person said. “PayU just asked the employees to surrender their laptop and paid two months' salaries,” the person added.

The person warned that the fear of more layoffs looms large at the company. The PayU Finance team consisted of around 300-350 members before the layoff.

“In line with the changing market dynamics, we at PayU are repivoting our Credit business strategy and sharpening focus on strategic priorities that will continue to drive success and growth for our business and enhance customer experience. This realignment is leading to some departures and we are dedicated to fully supporting all colleagues during this transition." said PayU spokesperson, without confirming the number of layoffs.

Just a day after the layoffs, several PayU employees were seen posting celebratory messages and videos on LinkedIn, highlighting their role as priority payment aggregator partners powering major e-commerce platforms' festive season sales. They expressed pride in taking on the challenge of ensuring the event's success, despite the recent job cuts in the company’s credit division.

The layoff comes as PayU India has been gearing to float its initial public offering (IPO) by the end of this year. In November last year, Ervin Tu, interim CEO of Prosus, which owns PayU, had said he was hopeful of a public listing for PayU India by the second half of 2024.

However, Fabricio Bloisi, who took over as CEO of Prosus earlier in July was’t happy with the performance in India when he visited the country last month, one of the persons cited above revealed, as the India business failed to improve profitability in FY24. “The pressure to be profitable is too much so they are trying to cut costs from the business that is not generating returns for them,” the person explained.

According to Prosus’ annual report, its revenue from India –  the largest market in PayU’s payment service provider (PSP) business –  grew 11% to $444 million in FY24 despite being unable to onboard new merchants due to the noted embargo during the year. Revenue growth was driven by increasing volumes from existing merchants and growing value-added services such as affordability, it added. However, while its payments business in India achieved a 3% trading profit margin in FY23, this worsened to -3% in FY24 due to the change in merchant and payment method mix, it noted.

Still Prosus has reinforced its investment commitment towards India.

"India remains a highly attractive strategic market for PayU, given that it is expected to become the third-largest economy by nominal GDP within the next decade," its latest annual report noted.

It added that it has continued investing and building new opportunities such as credit in India. "The credit business revenue has grown 12x since FY21, translating into a revenue CAGR of over 128%. This growth has been coupled with cost reductions, ensuring that the trading-loss margin continued to improve YoY," it explained.

In November last year, PayU India shut its prepaid payment instrument business LazyCard that it said helped narrow its losses of payments and fintech segment to $22 million during the six-month period ended September 2023.

Interestingly, while it has been putting a lid on one business, it has been pushing to make a dent in the other. Earlier in April this year, PayU received in-principle approval from the Reserve Bank of India (RBI) to operate as a payment aggregator. Previously, it was banned from onboarding new clients for 15 months by the regulator.

Notably, this is not the first time that PayU has laid off employees. To be fair, tech startups in India went on a laying off spree in the wake of funding winter in the past few years.

PayU has done several rounds of layoffs and notoriously they have come at the start of the festive season. Last year, they laid off around 50 people on the second day of Navratri. In 2022, they sacked 85 employees.

Employees have been vocal about their frustration about layoffs and bad appraisal even as the senior management enjoy the perks of bonuses and traveling.

Besides the layoffs, there has been several senior exits at PayU over the past couple of months. 

The company’s spokesperson neither confirmed nor denied the resignation list shared by The Head and Tale. They stated, "Joining and Resignations are a normal part of any business cycle. The list provided isn't entirely accurate- while some individuals have transitioned or are in the process of doing so, others continue to be with PayU.”

The Head and Tale has learned that two months ago, PayU India had to cease its townhall as as an employee questioned about appraisals. 

The company, last month, brought together payments, credit and paytech as a service under one identity ‘PayU’, and even launched a refreshed logo.