Gurugram-based hospitality firm OYO has offloaded 150 employees to research and consultancy firm KPMG as it looks to shed workforce outside its core focus areas.
The company is planning to let go of employees in ancillary units, like financed shared services, to focus on its core sectors such as hotel onboarding. Amid the Covid-19 pandemic last year, revenues for the hospitality sector plummeted, severely affecting the financial health of startups in the space, such as OYO. Since then OYO has been on a cost-cutting spree and even had to lay off employees.
“OYO’s core expertise lies in being a technology and revenue growth brand for owners and operators of small hotels and homes. OYO’s financial shared services teams primarily worked on transaction processing covering payables and receivables management, travel and expenses, and other related routine financial operations. And we believe these are best run by companies that have proven expertise and experience to do so,” an OYO spokesperson told Moneycontrol, which first reported the development,
The company’s founder and CEO Ritesh Agarwal had come on record in April 2020 to confirm a 50 to 60% drop in OYO’s occupancy rate and revenues. He had also specified that the company’s balance sheet had come under severe stress. Meanwhile, startup layoff tracking website Layoffs.fyi had estimated that OYO revenue was at about 30% of its pre-Covid levels.
All through last year, OYO either laid off or furloughed several of its employees to tide through the tough period. In September last year, OYO increased the furlough period for its employees by another six months, till February 2021. The company also provided a Voluntary Separation Program (VSP), through which employees would be provided with financial assistance, relaxation on ESOP vesting, health insurance coverage, career transition support amongst other things.
OYO lead investor Softbank Vision Fund CEO Rajeev Misra said last year that the company had reduced its monthly burn by 70% from $100 Mn pre-Covid to $30 Mn per month. The company is also clocking in nearly $25-30 Mn per month in revenue, he had claimed and had achieved break-even as a result.
Last month, OYO raised INR 54 Cr from Hindustan Media Ventures as part of its Series F1 round. According to Crunchbase, to date, the 2012-founded company has raised $3.2 Bn 17 funding rounds from 23 investors. In January itself, Oyo claimed that it had $1 Bn in cash and cash equivalent to navigate the post-pandemic market.