Oyo CEO Ritesh Agarwal hints at more layoffs to drive sustainable growth; around 1,000 Indian employees to lose jobs

The focus of Oyo and Agarwal for 2020 will be on sustainable growth, operational and customer excellence, profitability, and training and governance.

Oyo will, in the coming days, lay off 1,450 employees, 1,000 of them in India, in an attempt to drive “sustainable and profitable growth” at the SoftBank-backed startup, a source told Tech2.

The budget hotel chain, which has 20,000 employees in India and overseas, is facing a backlash from partners and former and present employees because of transparency and governance issues.

“Change can be hard. It requires tough choices and it demands bold actions,” Oyo founder Ritesh Agarwal said in a letter to employees on 13 January. Tech2 has seen a copy of the letter.

The letter comes amid reports of pink slips being handed out to staff in India as well as China.

The Gurgaon-headquartered company started talking about rightsizing in November during Oyo’s Global Leadership Meet attended by 100 of its top leaders.

“In the Global Leadership Meet recently, we have together committed to four key values that are a natural extension of our cultural tenets. These values are building trust, being respectful, and being resilient at all times,” Agarwal wrote.

Oyo rooms. Image: Facebook

Oyo rooms. Image: Facebook

The CEO also admitted that in chasing high growth, the company went ahead of itself that “pressure-tested the organisation at multiple levels”, including at the cost front. “This year, we are taking steps to address this,” he said even as he went on to say that the company’s revenue increased three times in 2019 when compared to the previous year.

Culture and governance

Commenting on a recent New York Times story that talked about “Oyo’s toxic culture and troubling incidents”, Agarwal said that the company was looking into each of the allegations made by the American publication.

“We continue to be subject to regular external audits and have reached a stage as a company where we are making significant investments in compliance, training, and governance that ensure operational consistency and accountability,” he said.

Roadmap 2020

The focus of Oyo and Agarwal for 2020 will be on sustainable growth, operational and customer excellence, profitability, and training and governance.

The company needed to balance the speed of the growth with operational capabilities to ensure sustainability, Agarwal said.

To achieve operational and customer excellence, the company will use “technology and data insights along with our culture of service to simplify operations and drive consistent, and high-quality execution”.

On profitability, a three-prong strategy is in the works: to increase efficiency while focusing on core businesses and rationalising growth avenues; focus on profitable locations and buildings and avoid growth that dilutes margins, and further reduce operating costs.

The last objective is to improve training and governance at Oyo, which has emerged as the biggest concern over the last few months.

“(We will) enable OYOpreneurs with the right tools to drive productivity, consistency and governance while building a high-performing and employee-first work culture,” Agarwal added.

But it will come at a cost—downsizing. “Some roles at Oyo will become redundant as we further drive tech-enabled synergy, enhanced efficiency and remove duplication of effort across businesses or geographies,” Agarwal said in the letters. “As a result, we are asking some of our impacted colleagues to move to a new career outside of Oyo,”

These employees will get between three to four months of salary, the source said.

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