The company plans to lay off about half of 6,000 employees from its China operations. The recent coronavirus outbreak has forced the travel industry on its knees forcing businesses to take tough measures.
Indian hospitality unicorn OYO Hotels and Homes is reportedly cutting down its global workforce by about 5,000 to 25,000 people. The biggest downsizing will be from the company’s China business after business there is struggling in the wake of the novel coronavirus outbreak.
According to a Bloomberg report, the Indian startup, which is one of the largest in SoftBank Group Corp.’s portfolio, is reducing staff in China, the US, and its home country as it seeks to boost profitability.
In an interview with Bloomberg, OYO Chief Executive Officer and Founder, Ritesh Agarwal said,“In our previous phase, we added a lot of properties to our platform and built the brand and mindshare. Our first focus of 2020 is growth with profitability.”
Oyo expanded rapidly after its founding in 2013 and soon reached a valuation of $10 billion, but investors have soured on money-losing businesses after WeWork’s IPO debacle and SoftBank has pushed portfolio companies to prioritize profitability.
Agarwal notified that the global workforce headcount will fall about 17% from 30,000 in January 2020. He also hoped that by the end of the company’s restructuring process, OYO would have over 25,000 worldwide. The company is also prioritizing improved relations with hotels and stronger corporate governance, he said. The worldwide overhaul was in full swing, he added.
China was once a crucial market for the Indian hospitality company as part of OYO’s global expansion, but since the coronavirus outbreak in the country, businesses and travel industry have been facing severe problems in running operations. The 6-year-old startup intends to fire about half of its 6,000 direct full-time staff in the country.
As per the report, the staffing reductions are up sharply from an envisioned reduction of about 5% of Chinese employees prior to the epidemic, which abruptly chilled travel across the world’s No. 2 economy. It also follows the dismissal of 12% of its 10,000 staff in its home country of India, people cited in the report said.
Addressing the loss of business due to the outbreak, Ritesh said, “In China, the coronavirus has hit us and in specific provinces, we are trying hard to keep hotels open, as many as possible. It’s a tough time for our hotel partners.”
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