Gupshup, a leader in the conversational AI sector, has reportedly laid off approximately 500 employees over the past few months as part of its ongoing restructuring efforts aimed at improving its bottom line and streamlining operations amid challenging market conditions.
According to sources who spoke to Inc42, Gupshup laid off around 200 employees in early April 2024, marking the second such downsizing in just five months. The company had previously let go of 300 employees in December 2023, bringing the total number of layoffs to nearly 500 since late last year.
The layoffs were primarily concentrated among employees from companies Gupshup acquired between 2021 and 2022. These acquisitions were part of the company’s rapid expansion strategy and included firms like Dotgo, Knowlarity, Active.ai, AskSid, and OneDirect, all within the conversational AI and customer engagement sectors. However, Gupshup clarified in a statement to Inc42 that the layoffs were not solely focused on employees from the acquired companies.
The decision to reduce its workforce is part of Gupshup’s strategy to eliminate redundancies and improve operational efficiency. As the conversational AI and customer engagement sectors become increasingly competitive, Gupshup continues to focus on long-term profitable growth.
“We continue to innovate and drive AI-led customer engagement, but we are also focusing on efficiency and profitability. These organisational changes, while difficult, will better position us for global market leadership in the conversational AI space,” said the company in an official statement. The company also expressed its appreciation for the contributions of the affected employees.
A former employee described the experience differently, referring to it as a “forceful resignation,” citing the lack of time or formal notification provided to those affected by the layoffs.
Gupshup’s restructuring efforts follow a series of acquisitions made after the company raised $100 million in Series F funding in April 2021, led by Tiger Global. This funding round helped fuel its expansion into the AI-driven conversational platform market, increasing the company’s valuation to $1.4 billion in 2021.
Despite the recent layoffs, Gupshup has seen significant revenue growth, with a reported 55% year-on-year increase, reaching £300 million in FY23. The company is targeting a doubling of this figure in FY24, although its financial results for the current year have yet to be released.
Originally launched as an SMS-based platform in 2004, Gupshup has pivoted to become a leader in conversational AI, capitalising on the growing demand for AI-driven solutions in marketing, commerce, and customer support. This pivot positions Gupshup well in the rapidly growing generative AI technology space.
Despite speculation regarding further layoffs, Gupshup has denied rumours of another round of job cuts in the near future. However, some sources within the company suggest that further layoffs could occur in June 2024, with between 100 and 300 employees potentially affected. Gupshup, however, maintains that it is a profitable company with no immediate plans for further workforce reductions.
With backing from investors such as Tenaya Capital and Fidelity, Gupshup is exploring the possibility of an IPO. CEO Beerud Sheth has revealed that the company has received significant interest from public market investors and is working through the necessary legal and financial steps to shift its base from the U.S. to India.
As Gupshup navigates these changes, its ability to adapt to the evolving AI landscape will determine its future trajectory in an increasingly competitive market.
