COVID-19 Hits Taxi-aggregator, Ola to Lay Off 1,400 Employees

With an already stunted economy taking an unforeseen hit as a result of the lockdown imposed due to COVID-19, businesses across sectors are resorting to pay cuts and layoffs. The latest in line is cab aggregator Ola, which is laying off 1,400 staff from rides, financial services and its food business as revenues declined by 95% over the last two months, according to a note by its CEO Bhavish Aggarwal, PTI reported.

In an email to employees, Aggarwal reportedly made it evident that the future is "very unclear and uncertain" and that the impact of the 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% 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," the email said, according to the news agency.

The company has decided to downsize and "let go" of 1,400 employees, Aggarwal added.

The Ola Cabs CEO said the move would be a one-time exercise and would 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 is said to have noted.

Aggarwal reportedly added that more companies were expected to have a large number of employees work from home, and that air travel would be limited to essential trips with vacations being put off for later.

"...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 reportedly said.

Over 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 have dried up demand and ravaged businesses.

According to PTI, Zomato has laid off 13% of its 4,000-strong staff, while Swiggy said it will let go of 1,100 employees. Uber is laying off 3,000 people globally and the move is expected to impact its India operations as well.

In 2019, Ola had undertaken a restructuring exercise of its 4,500-workforce that had resulted in about 350 employees being laid off. In his mail, Aggarwal said the crisis brought about the need to conserve cash to enable investments 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 was quoted saying.

The company has, in the past, spoken of its aim to turn profitable and go public within the next few years.

Aggarwal said the aggrieved employees would receive a minimum financial payout of three months of their fixed salary, irrespective of the notice period, according to PTI. "Employees who have spent significantly more time with us will be eligible for higher payouts depending on tenure," the email said.

He added that 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.

"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 reportedly decided to offer medical insurance for up to two 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 two 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 reportedly added that 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," the letter said.