Hospitality major OYO has laid off 600 product & engineering employees out of its 3,700-member team, even as it hires another 250 employees in relationship management teams.
In some cases, this has resulted in team sizes being cut by almost 50 – 70 per cent and people being asked to exit the company in 30 days without any severance pay, according to three sources close to the development, who spoke to businessline on the condition of anonymity.
In a statement, OYO said, “The company will be helping as many employees as it can in the outplacement and continuing with their medical insurance cover ranging between 3 months on an average. We are making wide-ranging changes in the organizational structure. OYO is downsizing its Product & Engineering, Corporate Headquarters, and the OYO Vacation Homes teams, while it adds people to the Partner Relationship Management and the Business Development teams. “
One of the sources quoted above said, “OYO has not done any formal announcement and instead informally asked employees to resign. We have been asked to serve our respective notice periods and exit from the organization. We are also not being offered any severance or support in further employment.” OYO defines notice periods based on the seniority level of the employees, with junior employees getting notice periods of as less as 30 days.
Similarly, another source said, “my manager called me and asked to put down the papers because my name was on the list of people to be let go. He told me that the company is downsizing in an attempt to show profits and eventually do a successful public listing. OYO’s revenues have been hit, so they are trying to reduce expenses now.” The source added that the company also laid off people in August. However, the cuts were relatively less at that time.
Impacted employees also include fresh graduates with less than 6 months of experience, many of whom have posted the layoffs update on social media to seek new job opportunities. Employee expenses net of share-based payment expenses were the largest cost component for OYO in Q2 FY23, making 18 per cent of the revenues. This was followed by marketing expenses amounting to 14 per cent and general and admin expenses at 7 per cent of the revenues for H1 FY23.
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Commenting on the layoffs, Ritesh Agarwal, Founder, and Group CEO, OYO, said, “We will be doing all that we can to ensure that most of the people we are having to let go, are gainfully employed. Every member of the OYO team and I myself will proactively endorse the strength of each of these employees. It is unfortunate that we are having to part ways with a lot of these talented individuals who have made valuable contributions to the company. As OYO grows and a need for some of these roles emerges in the future, we commit to reaching out to them first and offering them the opportunity.”
Just last week, OYO filed second addendum to its DRHP reporting a net loss of ₹333 crore in Q2 FY23, even as its adjusted EBITDA grew eight times over Q1 to ₹56 crore. OYO has filed its IPO application to SEBI in 2021 and is eyeing a public listing in the early 2023.
OYO’s product and engineering teams are being merged for smoother functioning. The downsizing in tech is also happening in teams that were developing pilots and proof of concepts such as In-app Gaming, social content curation, and patron-facilitated content. Additionally, members of projects which have now been successfully developed and deployed such as ‘Partner SaaS’ are being either let go or are being redeployed in core product & tech areas such as AI driven Pricing, Ordering and Payments.
The company will be adding 250 members primarily in its relationship management teams to ensure better consumer and partner satisfaction and in business development teams to help scale up the number of Hotels & Homes on its platform.
As the integration of various functions of its European vacation homes business progresses, OYO is downsizing some parts of the business to increase efficiency and harness synergies. The company has also reassessed its corporate headquarters base afresh and is merging congruent roles and flattening team structures where needed.