OYO, the world’s third-largest, and the fastest growing hospitality chain of leased and franchised hotels, homes & living spaces, is likely to lay off up to 2,000 staff by February 2020 (Ref: ET) . The layoffs include sales, supply and operations employees. The layoffs are understood to be a part of the company’s measures to reduce costs ahead of its public listing.
As per the company sources cited in the media, the layoffs are based on an ongoing review of an employee’s performance and interest. OYO keeps a track of its employee’s performance through a grading based system every month. Depending on the results of their performances, some employees might be replaced after a performance improvement program. Also, OYO has been planning to cut its man-power cost and make its processes more tech-enabled.
According to the ET report – “The average salaries of these employees is in the range of Rs 10-12 lakh, so that could mean savings hundreds of crores for the company. A large number of people in sales and supply would be made redundant. OYO could then say that because they have made some of these processes technology enabled, they won’t need these people anymore.”
In December the company fired about 120 people from a team of 180 employees in its Mumbai corporate office. OYO plans to keep just about 8-10 sales people in each of its corporate branch. In August this year, the company also laid off 60 sales executives from its New Delhi and Gurugram office. Employees laid off this month have been given one month’s notice period by the company.
According to a report filed with the Registrar of Companies, OYO’s financial year ended with a widened net loss. The losses can be attributed to a combination of increased operating cost and employee benefit expenses. OYO’s net loss stood at Rs 2,384.69 crore for the current financial year.
There have been some structural and management changes at OYO of late. The company has been under pressure considering it’s aggressive expansion across multiple geographies, pressure from it’s lead investor SoftBank for profitability after the WeWork debacle, and pressure from the market considering hotel associations and partner crying foul over Oyo’s business practices. In a recent leadership reshuffle, Oyo moved their South Asia and India CEO Aditya Ghosh to its board, while appointing Rohit Kapoor, the CEO of their new real estate business Oyo LIfe, to Ghosh’s position. It is understood that, with the new CEO in place, a number of cost cutting and structural streamlining measures are being put in place.
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