The news about the mass layoff from OYO came around December in the last year, 2019. Since then, there are countless speculations going on and about the state of operations at the business enterprise. While the operations are going on without any hiatus, the layoffs are true as well. Many reasons are being cited for this huge move from the brand, including unethical practices, sour relationships with the real estate property owners, and COVID-19 pandemic. For the uninitiated ones, it is also important to know that this layoff procedure is not only of India, as the sacking notices are the talk in the US as well.
So, what went wrong with one of the largest aggregators of real estate? What were the reasons that the layoff amount is this much (around 2500), and what is expected from the future operations? Let us find out answers to all these and many more questions in the following sections.
We have opted for a question-answer-based approach for this post so that our readers can have a better understanding of the chronology and nature of the events that led to the current scenario.
What happened at OYO?
It started in April 2019, when OYO sacked 25 employees and issued related notices to 100 other employees. As per a personal interview given by the owner Ritesh Agarwal to the leading company Bloomberg, the global headcount of OYO will stand at only 25000 after dismissals are over. This news came as a shocker as the company has around 22000 employees in India only.
Further, it is reported that the company is significantly going to cut-back on the operations in China. This stands as a stark contrast to the fact that OYO has been referring to China as its second home. The main reason behind this is the lack of a sustainable market. So, in China alone, 3000 direct employees and 4000 discretionary employees are dismissed.
Cause of Mass Layoff: Lowering operational costs; removal of non-profitable assets and human resources are being cited as the major reasons behind this.
Is OYO still operational?
Yes! The operations are going on, but they are subject to the current COVID-19 regulations from the government. So, you can still book affordable accommodation and still enjoy the benefits such as OYO promo code. But, don’t expect all the properties to be available for bookings.
Is there any official announcement or news from the top management?
Yes, the company’s spokesperson said that the firings are nothing new or unexpected. They are a part of global restructuring the company is undergoing and will be taking effect in India, US, and China. The company, however, did not specify any fixed amount for the number of firings in each country.
Actually, even after pumping $600 million in the Chinese market, the company was left with a mammoth loss of $197 million. This alone amounted to the 60% loss encountered by the company in the last financial year. The company used to have 10000 hotels in China. However, the owners accused the company and put allegations of contract violations.
Is it because of COVID-19 that the company sacked so many employees and removed so many properties?
When asked about the impact of COVID-19 pandemic, Aditya Ghosh, who is also the Director of the company, agreed. He said that it is obvious for the company to be hit because of the pandemic. However, the effect might be short-lived. He also shared the information with Bloomberg and said that the operations are hit in China severely. The hotel partners are struggling to keep the hotels open, and the situation is gloomy.
What are the stats from the US in terms of firings?
360 employees were sacked in February 2020 in the US. The sacked employees belong to different departments such as Sales, Human Resources, and Business Development. The company encountered 75% losses, and the revenue dropped to a mere 25% of its previous earnings. The owner Ritesh Agarwal also reported that the expansion plans of the company in the US went awry, and around $50 million were lost in the US market. To help keep the firm afloat and avoid going in a state of the financial crisis, it was important to sack employees.
So, are the sacked employees being replaced?
No, they are not being replaced. Their positions are being scrapped. As of now, there is no such credible news that one can refer to find whether these positions will be filled or not. However, the sacking is done in a bias-free manner. Every month, the company is conducting tracking activities to grade the employees on the basis of their performance and business results. So, only the meritorious employees are going to hold their jobs secure. However, when interviewed, many sacked employees reported that they were told to go home even after maintaining a proper performance.
What does the future of the sales team look like at OYO?
Earlier this year, there were 180 employees in the Sales Department of the Mumbai office. Out of these 180, 120 were fired. When approached by the major publications and news websites, the middle management responded with a shocking revelation. The company might just have highly performing 8 to 10 salespeople in every branch. So, in future, the offices are expected to have a small, but a performance-driven team.
However, the sacking will not be limited to the sales department only!
The area managers, operations manager, and teams working in core business operations are also under the scanner.
What about the prevalent news of contractual violations done by the company?
Going by the talks of the employees and upper management, the property owners are citing these reasons because of the impact on their business. The owner responded with clear-cut words stating that the brand OYO has always been subject to external audits and will continue to do so.