Cab aggregator Ola is letting go 1,400 employees as the coronavirus pandemic has hurt its core ride-hailing business, joining a growing number of venture capital-backed technology companies to lay off staff and slash costs to survive.
“The fallout of the virus has been very tough for our industry in particular. Our revenue has come down 95% over the past two months,” Ola co-founder and CEO Bhavish Aggarwal said in a note to employees on Wednesday.
Ola’s announcement follows similar moves by food delivery companies Swiggy and Zomato, and Temasek-backed fitness startup CureFit as the pandemic and a nationwide lockdown since late March has severely impacted their business. Many other startups have had to pivot their business models to stay in the game.
While Zomato and Swiggy are laying off 13-14% of their employees, Ola's cuts translate to almost a third of its workforce of nearly 4,000. Ola's job cuts are also deeper than that of its main rival, Uber Technologies Inc. US-based Uber has said it will let go 6,700 employees, or about 23% of its workforce. An Ola executive, however, said the company is cutting 28-29% of its staff.
Aggarwal said while the company had initially hoped that the crisis would be short-lived, it was now evident that the coronavirus would not be eliminated any time soon.
“But unfortunately, it’s not been a short crisis. And the prognosis ahead for our business is very unclear and uncertain,” he said.
Agarwal said the impact of this crisis will “definitely” be long-drawn for Ola as more companies prefer to have a large number of employees work from home, air travel remains limited to essential trips and vacations being put off.
The company is also making efforts to preserve cash but will invest more including in research and development, he said.
“Mobility will always be at the heart of human progress. Formats will evolve depending on context – personal, shared, public transit, or the niches in between,” he said.
As economic activity returns, Aggarwal said, the need for mobility will return but the paradigms will have changed. “This crisis is accelerating macro trends of digital commerce and clean mobility, and our businesses are well-positioned to leverage these macro trends well.”
Ola said the employees being laid off will receive at least three months’ payout of their fixed salary. Also, these employees’ eligible ESOPs will vest forward to the closest quarter. “For those who may not have completed a year, as an exception, we will enable pro-rated vesting for the period of time spent with us,” Aggarwal said.
The employees will also be able to avail medical insurance until the end of December. The company is also offering health insurance to the parents and in-laws of the employees it is laying off.