SUMMARY
The layoffs are across Ola's Indian mobility, cloud kitchen and fintech business
In an email to employees, CEO Bhavish Aggarwal said that Ola's revenue had fallen 95% over the past two months
The company is offering up to three months of fixed salary as severance pay
Bengaluru-based cab aggregator Ola has announced that it is laying off 1,400 employees from its workforce. Employees were told about the layoffs in an email by cofounder and CEO Bhavish Aggarwal on Wednesday (May 20) morning.
In the email, Aggarwal said, “We had all hoped in the beginning that this would be a short-lived crisis and that its impact would be temporary….But unfortunately, it’s not been a short crisis. And the prognosis ahead for our business is very unclear and uncertain. It is going to take a long time for people to go out and about like before. The fallout of the virus has been very tough for our industry in particular.”
Aggarwal said that Ola’s revenue had fallen 95% over the past two months. Hence, the company has decided to downsize its operations. The layoffs are being done in the mobility business in India and by the end of next week for Ola Foods and Ola Financial Services. “No more COVID related cuts will be done after this exercise,” Aggarwal said.
The impacted employees will be informed by Saturday in one-on-one conversations with the HR team. The company is offering up to three months of fixed salary as severance pay, irrespective of the notice period. Beyond this, those employees who have spent significantly more time will be eligible for higher payouts depending on their tenure.
All eligible ESOPs will vest forward to the closest quarter. For those who may not have completed a year, as an exception, Ola is enabling enable pro-rated vesting for the period of time spent with Ola. It is also extending insurance and health benefits until December 31, 2020.
It is also extending health and wellness support through third-party partnerships, through to the end of the year. It is also offering outplacement support and allowing employees to continue using all company-issued laptops for the time being.
The company said that this crisis necessitates the need to conserve cash aggressively so that it is able to invest in opportunities in the future. Aggarwal said that the company is increasing its investments and adding people capabilities in R&D across the group through this crisis to double down on innovation and engineering.
He noted that the crisis is accelerating macro trends of digital commerce and clean mobility, and Ola’s businesses are well-positioned to leverage these macro trends well. “This is an opportunity for us to envision a new future of safe, efficient, and clean mobility, and recommit ourselves towards building this future,” he added.
Ola had restructured its business last year in November in a bid towards profitability. At the time, 5-7% of the company’s 4500 workforce was said to have been impacted. The layoffs were part of Ola’s plans to go public in the next 18-24 months and cut down losses.
However, with pandemic hitting the travel business, thus impacted Ola’s mobility business negatively. In late-March, Ola CEO had foregone his salary for the year and introduced funds to help its driver fleet as well. The company also engaged with the government to provide emergency medical travel and its technology platform.
Under lockdown 4.0, the company has regained permissions to operate across several states and said it is now operational in all 160 cities with enhanced safety protocols are applicable across every single trip. But since the company itself understands that the business will take a while to get back on track, the impact of pandemic will be seen going forward.
