With its business being down by 95% in the last two months due to coronavirus-induced lockdown, Ola today announced that it will have to fire 1,400 employees.
In an email to staff, Ola CEO Bhavish Aggarwal said the startup’s revenue is down by 95% in the last two months and the prognosis for business is now “very unclear and uncertain”. He said the impact of this crisis is “definitely going to be long-drawn for us” due to the spread of coronavirus.
“The fallout of the virus has been very tough for our industry in particular. Our revenue has come down 95 per cent over the past 2 months. Most importantly, this crisis has affected the livelihoods of millions of our drivers and their families across India and our international geographies,” Aggarwal said.
He said this will be a one-time exercise and will be complete by the end of this week for the India Mobility business, and by the end of next week for Ola foods and Ola Financial Services. “No more COVID-related cuts will be done after this exercise,” he noted.
Aggarwal explained that more companies are expected to have a large number of employees work from home, air travel will be limited to essential trips and vacations being put off for better times.
“…the impact of this crisis is definitely going to be long-drawn for us. The world is not going to revert to the pre-COVID era anytime soon. Social distancing, anxiety, and an abundance of caution will be the operating principles for everyone,” he said.
Last year, Ola had undertaken a restructuring exercise of its 4,500-workforce that resulted in about 350 employees being laid off. The company has, in the past, spoken of its aim to turn profitable and go public in the next few years.
Aggarwal said the impacted employees will receive a minimum financial payout of 3 months of their fixed salary, irrespective of the notice period.
“Employees who have spent significantly more time with us will be eligible for higher payouts depending on tenure,” he said.
Also, all eligible ESOPs will vest forward to the closest quarter and for those who may not have completed a year, as an exception, Ola will enable pro-rated vesting for the period of time spent with the company, he added.
“All affected employees will be able to continue using their medical, life and accident insurance cover for themselves and their families up to December 31, 2020 or the start of their next job whichever is earlier, to help minimise the financial burden of health and other risks in a time like this,” Aggarwal said.
All members of Ola’s extended leadership team have taken significant salary cuts.
Services of ride-hailing platforms like Ola and Uber have been affected ever since the lockdown began on March 25. In the fourth phase of the lockdown, cab rides have, however, been allowed in several cities after restrictions were eased. Uber’s services are now active in more than 40 cities, while Ola’s services are available in more than 160 cities.
San Francisco-based Uber has cut a quarter of its workforce globally since the year began, eliminating 3,700 people from the payroll earlier this month. Jobs are likely to go in India market as well. Uber lost $2.9 billion in the first quarter as the coronavirus pandemic decimated its overseas investments.