AI efficiency: Startup founder lays off 90% staff

Indian startup founder Suumit Shah has laid off 90% of the customer support staff at his e-commerce company, Dukaan, after an efficient artificial intelligence (AI)-powered chatbot surpassed their performance.

In his Twitter post making the announcement, Shah deemed the move "absolutely" essential as the AI bot largely decreased response times to a few minutes, while staff took longer — approximately two hours — to perform the same task.

The 31-year-old founder of the Bangalore-based startup, which supports traders in creating online stores and selling products, shared the news in a tweet that gained traction after being posted on Monday.

"We had to layoff 90% of our support team because of this AI chatbot. Tough? Yes. Necessary? Absolutely,” Shah wrote in his tweet.

The startup founder added that the AI tech made the response time for his company go from a minute to 44 seconds, almost an "instant".

The entrepreneur, in his tweet, claimed that his company's customer support costs were reduced by 85% as a result of tech intervention. Meanwhile, the resolution time went from two hours and 13 mins by his team to three minutes and 12 seconds by the chatbot.

Justifying his decision about the layoffs, Shah wrote that startups are prioritising "profitability" over "striving to become unicorns" in the country's current state of the economy.

"It's less magical, sure, but at least it pays the bills! Customer Support had been a struggle for us since long & fixing it felt like an opportunity to me," he tweeted.

Sharing the journey of successfully experimenting with AI, the Dukaan founder stressed the struggle for customer support was "real", hence his decision to move ahead with the firings.

However, he ended his tweet with an invitation to apply for other roles in his company, which currently employs 60 people, of which only three are part of the customer support team, reducing his monthly budget for the department to just $100.

"P.S. We're hiring for multiple roles at Dukaan," he tweeted.

"If you're passionate about AI, E-commerce, Product Design... , you know how to reach out to us," his tweet stated.