IPO-bound Oyo to sack 600 employees as part of restructuring

IPO-bound OYO on Saturday announced that it will downsize 10 per cent of its 3,700-employee base and will lay off 600 people as a part of its 'wide ranging' changes in its organisational structure while hiring 250 members.

The homegrown hospitality chain startup, in a statement, said: “It is downsizing its Product & Engineering, Corporate Headquarter and the OYO Vacation Homes teams, while it adds people to the Partner Relationship Management and the Business Development teams.”

Ritesh Agarwal, Founder and Group CEO of OYO, while talking about the reorganisation, said, “We will be doing all that we can to ensure that most of the people we are having to let go, are gainfully employed. Every member of the OYO team and I myself will proactively endorse the strength of each of these employees."

The SoftBank-backed hospitality firm said that it would be helping as many employees as it can in the outplacement and will continue with their medical insurance coverage ranging for up to 3 months on average.

“It is unfortunate that we are having to part ways with a lot of these talented individuals who have made valuable contributions to the company. As OYO grows and a need for some of these roles emerges in the future, we commit to reaching out to them first and offering them the opportunity,” Agarwal added.

Moreover, this is the second layoff exercise undertaken by OYO in the last two years. In December 2020, the hospitality startup laid off 300 employees. These layoffs were part of the company’s strategy to build a business sustainable in the long run.

Apart from layoffs, the SoftBank-backed hospitality chain also plans to hire 250 fresh members. Ritesh Agrawal founded startup also stated that its product and engineering teams are being merged for smoother functioning.

The company further added that the downsizing in tech is also happening in teams which were developing pilots and proof of concepts such as in-app gaming, social content curation and patron-facilitated content.

In addition to this, members of projects - which have now been successfully developed and deployed such as ‘Partner SaaS’ - are being either let go or are being redeployed in the core product and tech areas such as AI-driven Pricing, Ordering and Payments.

The company, while describing the need for fresh hiring, said that it will be adding 250 members primarily in its relationship management teams to ensure better consumer and partner satisfaction and in business development teams to help scale up the number of Hotels and Homes on its platform.

OYO, as a part of its integration of various functions of its European vacation homes business progresses, is downsizing in some parts of the business to increase efficiency and harness synergies, the statement added. The startup has also reassessed its corporate headquarter base and is merging congruent roles and flattening team structures.

Recently, OYO reported a net loss of Rs 333 crore in Q2 FY23, down from Rs 414 crore in Q1FY23. The IPO-bound company also revealed its addendum that the revenues in H1FY23 grew 24 per cent to Rs 2,905 crore.

OYO also reported a 69 per cent increase in its gross booking values (GBV). GBV is the monthly revenue the company earns per hotel. Despite the reduction in losses, some of the company’s key expenses continued to increase as per the results. Its marketing and promotional expenses grew by 19 per cent in H1FY23 to Rs 400 crore from Rs 336 in H1FY22.

Currently, OYO operates through 157,000 hotels and storefronts in 35 countries across India, Europe, and Southeast Asia.

In October 2021, OYO filed preliminary papers with Sebi to raise Rs 8,430 crore through an initial share sale. So far, it has not launched an IPO, citing the volatile nature of the market.