As per the International Labour Organisation’s prediction, the world will witness a loss of about 2.5 million jobs due to the coronavirus pandemic. Most of these job losses are coming from new-age startups and small scale industries who are being tested the most by the economic situation.
After hospitality startups like Treebo and Fab Hotels, Indian hotels major OYO has now also confessed that even its business is not untouched by the crisis.
The Indian hospitality unicorn and Softbank’s jewel, earlier this month while announcing job cuts and furlough for its US teams, had assured that its Indian team won’t be affected in terms of job cuts and furlough or pay cuts. But it seems like the inevitable has arrived quite early.
OYO India and South Asia CEO, Rohit Kapoor today announced that the company has decided on a restructuring process. In a company-wide TownHall and through email communication to all employees, he said that all employees will receive a 25% pay cut for the period of April-July. He also said that some of the employees have also been asked to go on unpaid leaves, and on furlough till August this year.
OYO India, employs over 10,000 on roll employees and around a similar number of asset managed staff. The move is expected to impact thousands.
As per emerging reports and sources, it is learnt that almost 40-50% of staff will be placed on furlough for next 3-4 months. And while no direct job cuts seems to have been announced today, it is highly probable that news related to job losses at OYO will start emerging soon.
While OYO had already been under pressure, considering its focus on unhinged expansion across the globe without being able to consolidate its market in any geography, the COVID-19 pandemic has had to take a further toll on any recovery plans of the company.
Rohit’s email to employees reads, “…our company is taking a difficult but necessary step for India, whereby we are asking all OYOprenuers to accept a reduction in their fixed compensation by 25 per cent. This will be effective for April-July 2020 payroll. All other benefits and terms of your contract will remain unchanged. Also, note that this action will be planned in such a way that post the proposed pay cut, the fixed compensation for any employee is not less than Rs 5 lakhs per annum.”
Employees being placed on Leave With Limited Benefits (LwLB) will be able to avail benefits such as continuation of medical insurance and parental insurance, school fee reimbursement and ex-gratia support. The company plans to support people in case of unforeseen medical emergency.
Industry insiders had already predicted the development earlier this month after company CEO and Founder Ritesh Agarwal said that the coronavirus outbreak had severely impacted the firm’s business globally. The company’s occupancy rate and revenues had dropped by “over” 50% to 60% since earlier this year, he said.
Incidentally, OYO is not the only company under Softbank’s umbrella that is sailing in hot waters. Post its IPO debacle, proptech startup WeWork is already engaged in a legal battle with the investor.
Companies like Kabbage and Glassdoor have also laid off significant number of staff to sail through the crisis and safeguard the company.
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