SUMMARY
The product and engineering teams, which are most affected by the layoffs, will be merged going forward
The startup will be adding 250 employees, primarily to its relationship management team, in the coming month
As per Inc42’s layoff tracker, Indian startups (including OYO) have laid off 16,783 employees in 2022 so far amid a funding winter
IPO-bound hospitality chain OYO has become the latest Indian startup to lay off employees in 2022. SoftBank-backed OYO will be laying off 600 employees, mostly involved in tech roles in product and engineering teams.
Confirming the development with Inc42, OYO said, “Product and engineering teams are being merged for smoother functioning. The downsizing in tech is also happening in teams which were developing pilots and proof of concepts such as in-app gaming, social content curation and patron facilitated content. Additionally, members of projects which have now been successfully developed and deployed such as ‘Partner SaaS’ are being either let go or are being redeployed in core product & tech areas such as AI driven pricing, ordering and payments.”
Besides, OYO will also be adding 250 employees, primarily in its relationship management team, in the next month or so to improve consumer and partner satisfaction. Some of these employees will also be added to the business development team to scale up the number of hotels and homes on the platform.
Talking about the reorganisation, Ritesh Agarwal, founder and Group CEO of OYO, said, “We will be doing all that we can to ensure that most of the people we are having to let go, are gainfully employed. Every member of the OYO team and I myself will proactively endorse the strength of each of these employees. It is unfortunate that we are having to part ways with a lot of these talented individuals who have made valuable contributions to the company. As OYO grows and a need for some of these roles emerges in the future, we commit to reaching out to them first and offering them the opportunity.”
This is the second layoff exercise undertaken by OYO in the last two years. In December 2020, the startup laid off 300 employees. The earlier layoffs were part of the company’s strategy to build a business sustainable in the long-run.
The latest development comes on the heels of OYO reporting its second consecutive EBITDA-positive quarter. It posted an adjusted EBITDA of INR 56 Cr in the second quarter of the financial year 2022-23 (FY23), registering nearly 800% growth over the preceding quarter when its adjusted EBITDA stood at INR 7.26 Cr. On a half-yearly basis, adjusted EBITDA improved from INR 277.9 Cr in H1 FY22 to INR 69 Cr in H1 FY23.
The startup reported a loss of INR 333 Cr during Q2 FY23, which was 20% lower from INR 414 Cr in Q1 FY23. OYO also managed to narrow its half-yearly loss by 22.2% to INR 747.1 Cr in H1 FY23 from INR 959.8 Cr in the corresponding period of FY22.
The Ritesh Agarwal-led startup, which was last valued over $9 Bn, saw its total revenue in the first six months of FY23 jump 21% to INR 2,956.7 Cr from INR 2,426.8 Cr in the same period last year.
Total income during the first six months of the current fiscal year rose to INR 2,956.7 Cr from INR 2,436.8 Cr during the same period last year.
OYO, which is heading for a INR 8,430 Cr public listing, filed its Draft Red Herring Prospectus (DRHP) last year. It received in-principle listing approval from the BSE and the NSE in January this year. However, its public listing continues to be shrouded in uncertainty due to the negative global investor sentiment amidst the ongoing Russia-Ukraine war, rising inflation, and fears of a looming recession.
The global macroeconomic conditions have hit sentiment of both public and private investors, leading to a funding winter in the Indian startup ecosystem. Consequently, Indian startups have been laying off employees and reorganising business to cut costs and increase their runway.
As per Inc42’s layoff tracker, Indian startups (including OYO) have laid off 16,783 employees in 2022 so far.
