The IPO-bound OYO has announced on Saturday that it will reduce 10 per cent of its 3,700 employee base and lay off 600 people as part of its 'wide ranging' changes to its organisational structure while hiring 250 employees.
In a statement, the homegrown hospitality chain startup said it is downsizing its Product Engineering, Corporate Headquarter and the OYO Vacation Homes teams, while adding people to the Partner Relationship Management and Business Development teams. Ritesh Agarwal, the founder and CEO of OYO, said, "We will be doing all that we can to make sure that most of the people we are having to let go are gainfully employed." Every member of the OYO team and I will proactively endorse the strength of each of these employees. The SoftBank-backed hospitality firm said it would help as many employees in the outplacement and will continue with their medical insurance coverage ranging from 3 months to 3 months on average.
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 said.
This is the second layoff exercise undertaken by OYO in the last two years. The hospitality startup laid off 300 employees in December 2020. These layoffs were part of the company's strategy to build a sustainable business in the long run.
The SoftBank-backed hospitality chain plans to hire 250 fresh members besides layoffs. Ritesh Agrawal founded a startup that said its engineering and product teams are being merged for smoother functioning.
The company said that the downsizing in tech is also happening in teams that are developing pilots and proof of concepts such as in-app gaming, social content curation and patron-facilitated content.
Members of projects - which have now been successfully developed and deployed such as Partner SaaS - are either being let go or are being deployed in core product and tech areas such as AI-driven Pricing, Ordering and Payments.
The company said it will add 250 employees to its relationship management teams to ensure better consumer and partner satisfaction and increase the number of Hotels and Homes on its platform.
The statement said that OYO is downsizing parts of the business to increase efficiency and to harness synergies as part of its integration of various functions of its European vacation homes business progresses. The startup has reassessed its corporate headquarter base and is merging a number of roles and flattening team structures.
OYO reported a net loss of Rs 333 crore in Q 2 FY23, down from Rs 414 crore in Q 1 FY 23. The IPO-bound company said that revenues in H1 FY 23 grew 24 per cent to Rs 2,905 crore.
OYO reported a 69 per cent increase in gross booking values. GBV GBV is the monthly revenue the company earns per hotel. Some key expenses of the company continued to increase as a result of the reduction in losses. Marketing and promotional expenses grew by 19 per cent in H 1 FY 23 to Rs 400 crore from Rs 336 in H 1 FY 22.
OYO currently 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. The volatile nature of the market has not been a factor in the decision to launch an IPO.