Gupshup Lays Off 500 Employees Amid Profit Push

AI platform Gupshup has axed close to 500 people over the past five months in what it claims is an effort to boost profitability and streamline operations. About 200 were cut off earlier this month, following a larger chop of 300 in December 2024. 

The rapidly growing company that achieved a unicorn valuation in 2021 stated that the restructuring was intended to eliminate redundant roles and improve operational efficiency. Gupshup maintained that the layoffs were not concentrated among those businesses despite many of the affected employees coming from firms acquired during its expansion phase.

Acquisition Spree and the Road to Consolidation

From late 2021 to mid-2022, Gupshup moved assertively to boost its offerings and expertise via acquisitions. It picked up five companies, Dotgo, Knowlarity, Active.ai, AskSid, and OneDirect. These deals were funded by a USD 100 million Series F round led by Tiger Global, which pushed Gupshup’s valuation to USD 1.4 billion.

As the firm has moved from being an SMS-based service to being a full-fledged conversational AI platform that leverages WhatsApp, Instagram, and other chat interfaces, its acquisitions have had the aim of "strengthening its position in customer engagement." But the gig of integrating the acquired companies' forces into the existing company appears to have created a bit of overlap, resulting in the recent right-sizing.

In a statement, Gupshup said it is still investing in innovation and AI-driven solutions for businesses, despite the cuts, making tough choices to ensure long-term growth.

Investor Reactions and Valuation Concerns

The layoffs come on the heels of a substantial markdown in late 2024 by investor Fidelity, which reduced the estimated value of its stake in Gupshup by 65% compared to 2021. This implied a new valuation for Gupshup of around USD 486 million—down from their prior USD 1.4 billion peak. While Gupshup had reported in earlier FY23 earnings that they were up 55% year-on-year to USD 300 million, they have not yet reported full FY24 numbers, and investor confidence clearly took a hit with this latest valuation.

Speculation about more job cuts at Gupshup has been played down. The company has stated that it is profitable and has denied that any more rounds of layoffs are coming. But several internal sources say that another wave of layoffs, this time aimed at 100 to 300 employees, could be coming by June. No one is confirming that report, though.

In recent months, Gupshup has faced challenges, but it still has an eye on a potential public listing. CEO Beerud Sheth signaled this year that interest in the company has been expressed by investors in public markets. However, for an IPO to happen, the company needs to sort out some regulatory and logistical matters that have to do with relocating its headquarters from the U.S. to India.