Cab aggregator Ola is laying off 1,400 staff from rides, financial services and food business as revenues declined by 95 per cent in the last two months due to coronavirus pandemic, a note by CEO Bhavish Aggarwal said.
In an email to employees, Aggarwal made it clear that the prognosis ahead for the business is "very unclear and uncertain" and the impact of this 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 two 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 decided to downsize and "let go" of 1,400 employees, Aggarwal added.
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.
In the past few weeks, a number of tech-led businesses like Uber, Zomato and Swiggy have announced layoffs as the COVID-19 pandemic and lockdown dried up demand and ravaged businesses.
Zomato has laid off 13 per cent of its 4,000-staff, while Swiggy said it will let go off 1,100 employees. Uber is laying off 3,000 people globally and the move is expected to impact India operations as well.
Last year, Ola had undertaken a restructuring exercise of its 4,500-workforce that resulted in about 350 employees being laid off.
Aggarwal, in his mail, said the crisis necessitated the need to conserve cash aggressively so that it is able to invest in opportunities in the future.
"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.
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.
The company has also decided to offer medical insurance for up to 2 parents (or in-laws) to each employee. This insurance will cover parents for all pre-existing ailments up to the age of 90, for a sum of Rs 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 retained 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.
Aggarwal said economic activity returns, so will the need for mobility.
"Formats will evolve depending on context -- personal, shared, public transit, or the niches in between. This pandemic has only highlighted the need for each of us to have safe and reliable mobility solutions. As economic activity returns, so will the need for mobility, but the paradigm will have changed," he said.