Ola to Lay Off 1,400 Employees After 95 Percent Drop in Revenues Due to COVID 19 Outbreak
Ola to Lay Off 1,400 Employees After 95 Percent Drop in Revenues Due to COVID-19 Outbreak
Ola has promised to pay a minimum financial payout of three months to its affected employees.
By Jagmeet Singh | Updated: 20 May 2020 15:07 IST
Affected Ola employees will continue to use their insurance cover until December 31
Ola Co-founder Bhavish Aggarwal made the announcements through a note
Affected employees will leave the company starting this week
Ola still has plans to increase its R&D investments
Ola has announced that it is laying off a total of 1,400 employees with a view to downsize its organisation that has a headcount of over 7,000 people. The new decision comes as an outcome of the unprecedented economic and social destruction that has emerged due to the COVID-19 crisis, Ola Co-founder and CEO Bhavish Aggarwal said in a note to the company's employees. The Bengaluru-based cab aggregator that is taking on US-based Uber has seen a 95 percent drop in its revenues over the past two months due to the pandemic.
Affected employees are promised to receive a minimum financial payout of three months of their fixed salary, irrespective of their notice period, Bhavish Aggarwal said in the note, which has also been published online. Ola is also set to provide higher payouts to the employees “who have spent significantly more time” with the company, depending on tenure.
Employees affected by the latest decision will additionally be able to continue using their existing medical, life, and accidental insurance cover for themselves and their families up to December 31 or start of their next job, whichever is earlier. Further, Ola has offered medical insurance for all pre-existing ailments up to the age of 90 for up to two parents (or in-laws) to each employee. This insurance will be available for a sum of Rs. 2 lakh and will be applicable for departing employees until December 31 or start of their new job.
“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,” said Aggarwal, adding that his team is allowing all company-issued laptops to be retained by the affected employees.
The affected employees working under the India Mobility business will depart from Ola by the end of this week, while people working at Ola foods and Ola Financial Services will leave their jobs by the end of next week, as per the note.
“No more COVID related cuts will be done after this exercise,” the note reads.
Uncertain future Aggarwal in his note to the employees mentioned that since the crisis was hoped to be short-lived initially, all members of Ola's extended leadership tried to resolve its issues by taking “significant salary cuts”. However, social distancing and working from home seem to bring a long-term impact on the company that has already seen the 95 percent drop in its revenues.
“[T]he prognosis ahead for our business is very unclear and uncertain,” said Aggarwal. “It is going to take a long time for people to go out and about like before.”
Ola ran initiatives for its driver partners such as offering up to Rs. 25,000 a month as a relief for its over 30,000 leasing drivers and zero-interest loans to over 2,00,000 driver families. But nonetheless, since people are no longer actively booking cabs and preferring to stay indoors due to the coronavirus spread in the global markets, cab drivers aren't able to generate any income. This is the reason for the massive impact on companies including Ola and Uber.
Earlier this month, San Francisco-headquartered Uber announced that it would lay off 3,700 full-time employees to reduce the impact of COVID-19. The company didn't confirm whether the layoffs that will affect 17 percent of its employee count will have any major impact on its workforce in India and global markets.
Lockdown outcome On March 25, the Indian government imposed a nationwide lockdown that halted taxi services.
That being said, Ola is set to increase its investments into R&D and innovation and is optimistic on the evolution of personal, shared, and public transit formats.
“As economic activity returns, so will the need for mobility, but the paradigms will have changed. This crisis is accelerating macro trends of digital commerce and clean mobility, and our businesses are well-positioned to leverage these macro trends well,” Aggarwal said in the note.
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