Hospitality major and unicorn startup Oyo is in the process of downsizing its workforce by up to 2,000 personnel, according to a report in the Economic Times. The process is on and might carry on till February 2020. The objective appears to be to save on manpower costs.
Oyo, while not directly confirming the layoffs, said that Oyo consistently evaluates, rewards and recognizes the performance of individuals in a meritocratic manner, and enables them to improve their performance. Oyo hence claims to continuously tracks performances of the individuals.
It said in a statement that depending on the results (a grading-based system) and the individualâ€™s interests, Oyo may replace some candidates after giving them the opportunity to go through a performance improvement programme.
One source has said many of the people being asked to leave have been drawing annual packages of close to Rs 10 lakh - Rs 12 lakh. Laying off such large number of employees would mean saving of hundreds of crores for the company.
The only reaction to have emerged from Oyo is that there is no indiscriminate firing of employees. The rating system determines the fate of the employee. Automation in certain functions is also cited as a reason for rendering some employees redundant in the system.
The report indicates that some employees are claiming even those with higher ratings have been handed the pink slip. The notice period being served to those asked to leave is one month.
Another report claims that more than 500 hotels which had been under the Oyo umbrella, have pulled out of the arrangement due to various issues. Again, Oyo says the figure is exaggerated.
There have been reports in the past, particularly immediately after the WeWork fiasco where SoftBank took a huge hit. It was rumoured then that the Japanese investor, which is also one of the largest stakeholders in Oyo, had advised all startups funded by it to look towards turning profitable as soon as possible. Oyo Hotels & Homes has reportedly posted a huge loss last financial year, of Rs 2,384.69 crore against a loss of Rs 360.43 crore the previous fiscal. Therefore, if the company is trying to cut down on the expenses on manpower, it should not come as a surprise.