Cab-hailing platform Ola is in the process of laying off around 20% of its workforce in a bid to cut costs and course correct for the over-hiring done in the past few years, according to four people aware of the development.
With an employee size of approximately 5,000, this is expected to impact the job status of around 1,000 employees. Sources also said that three rounds of layoffs have already taken place over the past three weeks and around 500 employees have been asked to leave.
The ride-hailing company has been looking to reduce costs ahead of filing for a public listing in the next couple of years. Dubbed as Manthan — an elaborate cost optimization project — Ola’s plan to downsize its workforce by 20% over the next 4-6 months is part of this project, added two of the four people mentioned above.
Entrackr couldn’t independently verify the name of the project.
“Almost half of the 1,000 include executive-level employees including senior managers and the other half is expected to be employees at mid-level functions,” said one of the four people cited above, requesting anonymity. This was corroborated by another source.
However, a company spokesperson said that only 5-7% of Ola’s 4,500 employee base has been affected as part of this exercise.
“With a view to become more nimble and have a sharper focus on growth and profitability, we are redesigning the organisation to build a structure that strengthens and leverages our local and global scale and enables faster decision making across all of Ola’s group companies,” added the spokesperson.
Ola’s last reported workforce base was around 6,000. However, over the last one year, the firm has seen multiple exits coupled with a wave of layoffs within its food-delivery vertical Foodpanda, shrinking the size of its employee base to around 5000, say the people cited above.
Several industry insiders Entrackr spoke with believe that following the WeWork fiasco which hit its largest investor SoftBank, most of the mega tech fund backed companies have been asked to move to profitability and focus on revenue metrics.
Analyst Chris Lane of research firm Sanford C. Bernstein recently said in a note that SoftBank’s Vision Fund which has stakes in other ride-hailing platforms such as Didi, Grab and Ola, all of which “will likely face similar issues as Uber, with their economics likely remaining challenged until robo-taxis become viable and eliminate the cost of the driver.”
Apart from the layoffs, Ola has also seen several senior-level exits in the past several months. One such was Srivatsan Sridhar who used to head the firm’s cab business and left Ola in September. According to his LinkedIn profile, Sridhar is currently working as the vice president of fintech startup Rupeek.
Another senior executive to have exited the cab-hailing firm in October was Gaurav Aggarwal, who was head of data science at Ola. He currently works at Google as a research scientist, his LinkedIn profile shows.
“Besides losing decent market share to Uber, the cab business has been stagnating and had a high cash-burn,” said one of Ola’s former employees, requesting anonymity. “So there was a lot of pressure to get that back on track, especially since Ola has been chasing public listing.”
It’s worth noting that Entrackr was the first to report about Ola setting up a pre-IPO trust in September.
Some people cited above further added that the layoffs are performance-based and are being conducted at all levels. “This is definitely not normal and doesn’t happen every year,” they said.
Moreover, the government’s plan to limit cab aggregator’s commission to 10% has also aided the pressure to cut costs.
That said, many believe this is a common phenomenon across high-growth startups that have been well-funded. Case in point would be Paytm which recently fired over 500 employees on account of over-hiring.
Entrackr had exclusively reported this last month.
“All high-growth companies have hired aggressively in the past and are over-staffed,” said a former employee at one of the unicorns requesting anonymity. “Now that revenue metrics have become a priority, companies are letting go of employees.”