Coronavirus Crisis: Ola To Lay Off 1,400 Employees, CEO Says Revenue Down By 95%

Cab aggregator Ola is laying off 1,400 staff from rides, financial services and food business as their revenues is declined by 95 per cent in the last two months due to coronavirus pandemic, a note by CEO Bhavish Aggarwal said.

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In a brief email to the employees, Aggarwal made it clear that the prognosis ahead for the business is ¡°very uncertain¡± and the impact of this coronavirus crisis is ¡°definitely going to be long-drawn for us¡±.

¡°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,¡± he said

The company has now decided to downsize and let go of 1,400 employees the CEO further added.

He said this will be a one time exercise and will be completed 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 Coronavirus-related cuts will be done after this exercise," he added.

He further explained that more companies are expected to have a large number of employees working from home, air travel is limited to essential trips and vacations are being put for better times.

¡°The impact of this crisis is definitely going to be long drawn for us. The world is 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.

In the past few weeks, a number of tech-led businesses like Uber, Zomato and Swiggy have announced layoffs as the coronavirus pandemic and nationwide lockdown dried up demand and ravaged businesses.

Precisely Zomato has laid off 13 per cent of its staff while swiggy said it will lay off 1100 employees. Uber has laid off 3000 people globally and the move is expected to impact the Indian operations as well.

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Last year, Ola restructured its 4,500 workforce that resulted in approximately 350 employees being laid off.

Aggrawal in his mail, said the crisis necessitated the need to conserve the funds aggressively so that it helps in investing in later opportunities.

"While we restructure our organisation to the new realities of our business, we are also going to recommit ourselves to strengthening our operational excellence.

"We are increasing our investments and adding people capabilities in R&D as a group, through this crisis to double down on innovation and engineering...This crisis is accelerating macro trends of digital commerce and clean mobility, and our businesses are well-positioned to leverage these macro trends well," he said.

Aggrawal further added, the impacted employees will receive a minimum financial payout for 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.

"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.

The firm has decided to offer medical benefits and insurance for up to 2 parents or the ones nominated to each employee. This insurance will cover parents for all pre-existing ailments which is up to the age of 90 and the sum is 2 lakhs.

"While we have made every possible effort to accommodate as many affected team members in open roles in our other group companies, we are rallying the support of the Ola Talent Acquisition team to help with outplacement support for as many people and in helping find suitable roles for them outside of Ola," he said.

In addition to this, we are also allowing all company-issued laptops (primary work devices) to be used by affected employees, he added.

Aggarwal said all members of Ola's extended leadership team have taken significant salary cuts.

"We had all hoped in the beginning that this would be a short-lived crisis and that its impact would be temporary.

"Over the past couple of months, all members of our extended leadership team have taken significant salary cuts to be able to help the organisation delay tougher people decisions as we waited for the situation to evolve. But unfortunately, it's not been a short crisis," he said.