Ola follows Uber, lays off 1,400 staff as Covid-19 hits ride-hailing biz

Ola's revenue has come down 95% in the past 2 months because the disruption caused by the coronavirus.

Ride-hailing giant Ola has announced laying off 1,400 employees, or over 33 per cent of its workforce, as Covid-19 continues to pound the transportation industry. The Bengaluru-based firm said it had to take this step because the situation was not expected to improve anytime soon.
 

“The Covid crisis continues to unfold all around us, causing unprecedented economic and social destruction. It has also become evident that the coronavirus will not be eliminated anytime soon. We will rather have to learn to live with the virus and resultant implications,” Ola co-founder and Chief Executive Officer Bhavish Aggarwal said in a note to the employees.
 

“In these circumstances, today I write to all of you with the toughest decision I have ever taken — the need to downsize our organisation and let go of 1,400 of our valued employees.”
 

This comes after a day after rival Uber said it was slashing 3,000 jobs and closing dozens of offices globally. A few days ago foodtech firm Swiggy announced laying off 1,100 employees while another food delivery firm, Zomato, said it would let go of 13 per cent of its staff, affecting close to 520 employees.

The fallout of the virus has been tough for ride-hailing outfits in particular.
 

Ola’s revenue has come down 95 per cent over the past two months. Most importantly, this crisis has affected the livelihoods of millions of its drivers and their families across India and international geographies.
 

The Softbank-backed company said it would be a one-time exercise, which would be completed for the company’s India Mobility business by the end of this week while for Ola Foods and Ola Financial Services it would take one more week.
 

Between Wednesday and Saturday, Ola’s human resources team will have one-to-one conversations with each employee affected.

Ola said while nothing could take the emotional trauma away for the affected employees, the company had tried to bring together a comprehensive benefit plan. Every affected employee, the company said, would receive a minimum financial payout of three months’ fixed salary, irrespective of the notice period.

The employees who have spent a significantly long time with Ola will be eligible for higher payouts, depending on tenure. All eligible ESOPs (employee stock ownership plan) will vest forward to the closest quarter. For those who may not have completed a year, Ola said, it would enable pro-rated vesting for the period of time spent with the firm, as an exception.

Besides, 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.
 

The firm is also providing parental insurance, which will cover parents for all pre-existing ailments up to the age of 90, for a sum of Rs 2 lakh for that period.

The company said it was 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 Ola.
 

It is allowing the affected employees to retain all company-issued laptops (primary work devices).
 

Over the past couple of months, all members of Ola’s extended leadership team have taken salary cuts.
 

“But unfortunately, it’s not been a short crisis. And the prognosis ahead for our business is very unclear and uncertain. It is going to take a long time for people to go out and about like before,” said Aggarwal.
 

With more companies preferring to have a large number of employees work from home, air travel limited to essential trips, and vacations being put off for better times, the impact of this crisis is going to be long-drawn for Ola. 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, added Aggarwal.

The company has raised $3.8 billion from top investors such as Chinese internet giant Tencent, Japan’s SoftBank, and South Korea’s Hyundai Motor Company.
 

One of the top unicorns in the country, Ola is valued at around $5.8 billion.