SoftBank-backed Indian startup Oyo to cut 5,000 jobs globally
Oyo said on Wednesday it is laying off 5,000 people from its global workforce as the Indian budget hotel startup looks to cut its spendings and chase profitability.
The latest round of job cuts would reduce Oyo’s headcount to 25,000 in over 80 countries where it operates. An Oyo spokesperson said the job cuts are part of restructuring that the startup announced in January.
“The global restructuring exercise at OYO was announced in January 2020 and the recent developments in China are in line with the same. China is a home market for OYO, and we will continue working with our thousands of retained OYOpreneurs to deliver against our core mission of creating quality living experiences for millions of middle-income people around the world,” the spokesperson said.
“During the tough Coronavirus situation, we will continue to support the benevolent and resilient Chinese society, in every possible way. We want to thank our partners, employees and customers for standing strong together.”
Bloomberg reported that the job cuts would largely impact Oyo’s business in China, where the company plans to let go half of its 6,000 direct full-time staff, the U.S., and India. Oyo also plans to “temporarily” lay off 4,000 discretionary workers, some of whom will be invited back once the business recovers, the report said.
Founded by Ritesh Agarwal and heavily backed by SoftBank, Oyo has aggressively expanded to international markets in recent years and sought to become the biggest hotel chain globally.
During its journey, it has also raised more than $1.5 billion. In October, Agarwal, 26, announced that the firm was seeking to raise an additional $1.5 billion, with him financing $700 million personally.
But the startup’s aggressive expansion came under scrutiny last year after things went spectacularly south, and quickly, at WeWork, another SoftBank portfolio startup.
The New York Times reported earlier this year that many of the hotel partners of Oyo felt cheated and in dire financial condition after the startup reneged on its committed promises. Indian business outlet The Ken further documented the increased pressure the startup put on its employees to meet unrealistic expectations.
Oyo reported a loss of $335 million, up from a $50 million loss a year earlier, on $951 million revenue globally for the financial year ending March 31, 2019.
“As difficult as some of these decisions have been to make, especially when it comes to changes to our staffing model, we have reasons to believe that this is the right thing to do for the business and for the 25,000+ OYOpreneurs who remain with the company. We are mostly through, and will complete this restructuring shortly, as we prepare for a strong and sustainable growth in 2020, and beyond,” Agarwal wrote in a blog post in January.
Source: TechCrunch
