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 2 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.
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.
"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.