Ride-hailing giant Ola is laying off its 1,400 employees as Covid-19 continues to severely impact the transportation industry. This comes after a day after its rival Uber said it is slashing another 3,000 jobs and closing dozens of offices globally. A few days ago, foodtech firm Swiggy said it is laying off 1,100 employees and another food delivery firm Zomato said it would let go of 13 per cent of its staff, affecting close to 520 employees due to Coronavirus impact.
“Unfortunately, the Covid crisis continues to unfold all around us, causing unprecedented economic and social destruction. It has also become evident that coronavirus will not be eliminated any time soon. We will rather have to learn to live with the virus and resultant implications,” Ola co-founder and CEO 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 organization and let go of 1,400 of our valued employees.”
This will be a one-time exercise and will be complete by the end of this week for the company’s India Mobility business and by the end of next week for Ola foods and Ola Financial Services.
The fallout of the virus has been very tough for the ride-hailing industry in particular. Ola’s revenue has come down 95 per cent over the past 2 months. Most importantly, this crisis has affected the livelihoods of millions of its drivers and their families across India and international geographies.
Bengaluru-based Ola has raised a total of $3.8 billion in funding 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.
Between Wednesday and Saturday, Ola’s human resources team will have one-on-one conversations with each and every one of the impacted individuals. Ola said while nothing can take the emotional trauma away for those of its colleagues who will be leaving, the company has tried to bring together a comprehensive benefits plan. This will ensure that every single team member affected is given maximum support on all fronts – financial, healthcare, emotional, and career-support.
Every affected employee will receive a minimum financial payout of three months of their fixed salary, irrespective of the notice period. Beyond this, those employees who have spent significantly more 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, as an exception, Ola said it will enable pro-rated vesting for the period of time spent with the firm.
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 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 is 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. In addition to this, it is also allowing all company-issued laptops (primary work devices) to be retained by affected employees.
Over the past few months, all members of Ola’s extended leadership team have taken significant salary cuts to be able to help the organisation delay tougher people decisions as it waited for the situation to evolve.
“But unfortunately, it hasn’t 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 definitely 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, said Aggarwal.
“These decisions are not reflective of anyone’s performance and are purely a function of the uncontrollable circumstances that we have been faced with,” he said.