Hotel group OYO has laid off 600 product and technical staff from its 3,700-strong team while hiring another 250 into relationship management teams.
In some cases, this has resulted in team sizes being slashed by nearly 50 to 70 percent and employees being asked to leave the company within 30 days without severance pay, according to three sources close to development who spoke to businessline on the condition of anonymity.
In a statement, OYO said: “The company will assist as many employees as possible with outplacement and continue their health insurance coverage for an average of 3 months. We are making far-reaching changes in the organizational structure. OYO is downsizing its product and engineering teams, corporate headquarters and OYO Vacation Homes teams, while adding staff to partner relationship management and business development teams. ”
One of the sources cited above said: “OYO has not made a formal announcement, instead informally asking employees to resign. We were asked to comply with our respective notice periods and to resign from the organization. We are also not offered severance pay or continued employment assistance.” OYO defines notice periods based on employee seniority, with younger employees receiving notice periods of less than 30 days.
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Similarly, another source said: “My manager called me and asked me to put the papers down because my name was on the list of people to be made redundant. He told me that the company is reducing its size in order to make a profit and eventually go public successfully. OYO’s revenue has been hit so they are now trying to cut expenses.” The source added that the company also laid off employees in August. However, the cuts were relatively small at the time.
Affected employees also include recent graduates with less than 6 months of experience, many of whom posted the layoff update on social media to seek new employment opportunities. Personnel expenses, net of stock-based compensation expenses, were the largest cost component for OYO in the second quarter of fiscal 23, accounting for 18 percent of revenue. This was followed by marketing expenses at 14 percent and general and administrative expenses at 7 percent of revenue for H1 FY23.
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Commenting on the redundancies, Ritesh Agarwal, Founder and Group CEO of OYO said: “We will do everything in our power to ensure that most of the people we have to make redundant are in gainful employment. Each member of the OYO team and myself will proactively support the strength of each of these employees. It is unfortunate that we have to part with many of these talented individuals who have made valuable contributions to the company. As OYO grows and future needs arise for some of these roles, we are committed to reaching out to them first and providing them with the opportunity.”
Just last week, OYO filed the second addendum to its DRHP, reporting a net loss of £3.33bn for the second quarter of FY23, despite its Adjusted EBITDA growing eightfold from the first quarter to £56bn. OYO submitted its IPO application to SEBI in 2021 and is targeting a public listing in early 2023.
restructuring
OYO’s product and engineering teams will be merged for smoother functioning. Tech downsizing is also happening in teams that have been developing pilots and proof-of-concepts like in-app gaming, social content curation, and patron-backed content. In addition, members of projects that have now been successfully developed and deployed, such as B. “Partner SaaS”, either fired or reinstated in core areas of products and technologies such as AI-driven pricing, ordering and payments.
The company will add 250 members, mainly in its relationship management teams to ensure better customer and partner satisfaction and in business development teams to increase the number of Hotels & Homes on its platform.
As the integration of various functions of its European vacation home business progresses, OYO is downsizing some parts of the business to increase efficiency and leverage synergies. The company has also reassessed the basis of its corporate headquarters, merging congruent roles and flattening team structures where necessary.
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Released December 3, 2022
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