In its bid to achieve profitability and cut expenses, Indian hospitality unicorn Oyo is laying off thousands of employees in India and China. While the company has fired close to 5% of the total 12K employees in China, Oyo has reportedly let go of around 1200 people in India.
In December 2019, reports had already speculated about these layoffs. At that time, it was reported that the company has decided to lay off around 2,000 of its own employees by the end of January 2020.
According to Bloomberg, sources within SoftBank-backed Oyo said that the company has taken this decision in the backdrop of its restructuring plans in both India and China.
Oyo had previously declined speculation of layoffs saying it only terminates contracts of those employees that fail in its performance-based evaluation system.
Related Article: Oyo Denies Mass Layoffs Amid Reports Of Cost-Cutting
The development comes on the heels of SoftBank tightening its noose on Oyo and other portfolio companies.
SoftBank had given Oyo a deadline of March 31, 2020, to phase out contracts or businesses, which are not EBITDA-profitable. The decision to layoff employees in such a huge number can also be attributed to the plans of Oyo to list publicly in the US in 2022-2023.
Moreover, layoffs in Oyo have come just days after a recent New York Times report highlighted about “toxic” culture at Oyo among several other issues like unlicensed hotels and guesthouses.
Responding to this, Oyo founder and CEO Ritesh Agarwal wrote an email to the senior management saying that the company has a different view of reality than the report.
In 2019, the company had reported 2.7X jump in the number of bookings in comparison to 2018. However, the company’s valuation report had shown that Oyo reported a loss of INR 2384.69 Cr in FY19, a 5.5X jump from its losses in FY18. While the expenses for the company also grew 3.9X, Oyo’s revenue increased by 3.5X in FY19 as compared to FY18.
With a portfolio of more than 35K hotels and 125K vacation homes, and over 1.2 Mn rooms across 80 countries and 800 cities, the company is eyeing profitability in several countries by 2022-23.