PhonePe IPO: Employee exits rise to 22% in H1 FY2026; benefit spend up to Rs 4,096 crore in FY25

As PhoenPe gears up for its stock market debut, the Walmart-backed fintech is grappling with a less visible but significant challenge- a rising churn in the workforce.

The Bengaluru-headquartered company reported an employee attrition rate of 22.10% in the first half of fiscal year 2026, up from 16,98% in the same period in FY2025, according to its updated Draft Red Herring Prospectus (DRHP) documents.

The attrition has been climbing steadily over the past three financial years. PhonePe recorded an attrition rate of 34.24% in FY2025, compared with 31.41% in FY2024 and 27.88% in FY2023, underscoring the intensity of talent competition in India’s fast-growing digital payments and financial services sector.

In its IPO filing, PhonePe attributed the trend largely to hyper-competitive hiring for professionals with specialised domain expertise. The impact has been most pronounced in product development, sales, and customer support functions, where voluntary exits have been higher.

“The attrition levels are structurally higher in sales and customer support functions, as these are high-volume, target-driven entry roles with naturally greater mobility,” the company said, noting that specialised roles typically see longer tenures.

PhonePe also cautioned that employee burnout, particularly among high-performing teams working on rapidly scaling products, could further add to attrition pressures. The company acknowledged that an inability to attract and retain talent could affect customer experience, product innovation, and operational efficiency.

Even as employee exits have increased, PhonePe has significantly raised spending on its workforce. Employee benefit expenses, including salaries, training, insurance, gratuity, and other components, rose to Rs 2,869 crore in the first half of FY2026, up from Rs 2,149 crore in the year-ago period.

For FY2025, PhonePe’s employee benefit expenses climbed to Rs 4,096 crore, compared with Rs 3,603 crore in FY2024 and Rs 3,096 crore in FY2023. These costs accounted for nearly half (47.27%) of the company’s total expenses of Rs 6,069 crore in H1 FY2026, highlighting the labour-intensive nature of the business.

The company’s workforce has expanded alongside these costs. PhonePe reported a total employee count of 12,338 as of September 30, 2025, up from 10,909 in FY2025 and 9,723 in FY2024.

PhonePe’s proposed initial public offering will consist entirely of an offer for sale of 5.06 crore equity shares by existing shareholders, with no fresh capital being raised. Promoter WM Digital Commerce Holdings, owned by Walmart International Holdings Inc, will sell 4.59 crore shares, while the remaining stake will be offloaded by Tiger Global PIP 9-1 and Microsoft Global Finance Unlimited Company.

As the company readies itself for the scrutiny of public markets, the balancing act between sustaining growth, retaining talent, and controlling costs may prove as critical as headline revenue numbers.