Within the first month of 2020, OYO has seen a major restructuring leading to several layoffs across its home and international markets. While in India, the company has laid off around 3000 employees, 5% of its staff in China, and it has now laid off over one-third of its employees in the US.
A Skift report said that this week OYO has laid off around 360 employees from its US offices. The report said that the layoffs have taken place across numerous job categories, including business development managers, talent acquisition leads, and area general managers.
In California, more than 50 business development managers were laid off while in Florida more than 20 were reportedly asked to leave. The plan was shared with employees on email by OYO chief operating officer Abhinav Sinha, saying that the company hopes to emphasise on profitability and sustainable growth, which means that “some roles will become redundant”.
“We will be primarily be redirecting resources from sales and support functions to functions that build our operational capabilities like revenue management, data science & machine learning. engineering, and other areas,” Sinha wrote.
Sinha further said the decisions may have been difficult but “he’s confident that these are the right decisions for the business today.” The email, which is similar to what OYO chief Ritesh Agarwal had written earlier to employees in India, says the new strategy includes profitability through “measured growth” and technology investment; realigning the network and centralising some processes to create “highly efficient teams”.
An OYO spokesperson reportedly said that “while we are proud to have grown so quickly, we recognize that we sometimes got ahead of ourselves and are now implementing those learnings.”
The spokesperson said the “difficult decisions about headcount” would enable the company to hire and invest in other areas.
In January, OYO also tweaked its business model in the US. The capital improvement investments for hoteliers to fix their properties is now immediately withdrawn by OYO out of the hotel’s revenue in 15 monthly payments. Further, if a hotelier is terminated by OYO for cause, any lost revenue to OYO is payable for three years after the date of termination.
OYO is also offering revenue guarantees to some hotel owners but it is a lower amount than earlier such guarantees. With the new model, OYO is banking on revenue share from properties.
The report also cited a recently laid off business development manager who said that OYO’s hiring practices are “insane, with promises made about individual sales staff being responsible for certain territories but finding out once on-the-job that more than a half dozen employees had been assigned to the same turf.”
“They over-hire and overwhelm the market, and waste millions of dollars,” the former employee reportedly said.
Reports had suggested that SoftBank has a role to play in the recent layoffs due to pressure on portfolio companies to show profitability as soon as possible. OYO CEO for India and South Asia Businesses Rohit Kapoor had publicly dismissed any claims of SoftBank’s involvement behind these layoffs. Kapoor also noted that as a stakeholder SoftBank has certain expectations, which Agarwal and the management team were trying to fulfil. He said the layoffs were a part of OYO’s roadmap to attain profitability and were a “one-time exercise”.