Softbank- backed hospitality firm OYO spent the last two years aggressively expanding its presence in India and across the globe. Now it is looking to scale back.
As it looks to cut costs, the Gurugram-based firm is rolling back operations and slashing jobs with warns of more such layoffs in coming months as part of its restructuring and reorganisation of teams across businesses and functions in India.
OYO founder and CEO Ritesh Agarwal, in an internal mail to its employees in India and South Asia, confirmed the implication of the new strategy will make some roles at the company redundant.
“One of the implications of the new strategic objectives for 2020, is that, like the leadership team, we will reorganise more teams across businesses and functions. And this means that, unfortunately, some roles at OYO will become redundant as we further drive tech-enabled synergy, enhanced efficiency and remove duplication of effort across businesses or geographies,” Agarwal said.
Though he did not reveal the number of people to be impacted by layoffs, the number is said to be over 2,000, according to multiple media reports. On January 10, Bloomberg reported that OYO has let go of 5% of its 12,000 employees in China on the count of non-performance. It plans to shed another 1,200 in India over the next three to four months, it added.
Moreover, in India itself, OYO has lost more than 65,000 rooms since October, said a New York Times report citing internal company data. OYO, according to them, has also stopped selling rooms in over 200 small cities as of this month.
Agarwal further said that his company would focus on sustainable growth, profitability, training and governance. “Change can be hard,” he said. “It requires tough choices and it demands bold actions.”
OYO has around 10,000 to 12,000 employees on its payroll.
Employees who are asked to leave are being offered standard two months of severance pay.
The development comes at a time when six-year-old firm, apart from questions on its valuation from investors, has been facing allegations of tax evasion, bribery and anti-competitive practices.
“We take all the allegations very seriously and are looking into each and everyone,” Agarwal said in his letter.
OYO previous financial year reported financial has also raised concern as it saw its losses rising to Rs 2,384.69 crore whereas operating expenses jumped over 300% to Rs 6132 crore.
Last month, OYO had roped in Rohit Kapoor as the new CEO of India Southeast Asia replacing Aditya Ghosh who was elevated to a board position at the company. As per sources aware of the development, downsizing of the workforce has been in the works for a few months now.
Largely because, one of its biggest backers, Softbank has been focusing on sustainability. So far, SoftBank’s Vision Fund has poured in about $1.5 billion in the hospitality firm.
Softbank, after bearing huge loss from its investments in Uber and WeWork, has been changing its strategy and asking its investee firms to adopt sustainable path instead of chasing growth at any cost.
Recently, Paytm and Ola, SoftBank’s two largest bets in India, laid off over 1500 employees at mid and junior levels.
Below is a copy of the letter sent by OYO CEO Ritesh Agarwal to employees