Ritesh Agarwal ‘sorry’ as Oyo to further trim staff across verticals

Daniel Fowler
January 17, 2020

WeWork's fall led to questions about other startups that SoftBank had financed and whether those young firms could make money. Construction startup Katerra, another SoftBank-funded company, also cut its staff.

This month, layoffs have gained momentum in the new companies in which SoftBank had invested. The South American delivery service Rappi and the new carpool company San Francisco Getaround said they were firing employees.

Also backed by Airbnb Inc., Sequoia Capital and Lightspeed Venture Partners, Oyo now works with 10,000 hotel owners in the country. "Everyone else was fearful to say the emperor had no clothes".

SoftBank reportedly gave Oyo a deadline of March 31, 2020, to phase out contracts or businesses that are not EBITDA-profitable.

OYO, which Agarwal founded six years ago when he was 19, started as a platform to aggregate budget hotels across India but has since branched into leasing and franchising its own properties like a traditional hotel chain. The company coaxes the hotels to become Oyo-branded destinations that list exclusively through its website; it then markets those rooms online to travelers and takes a cut of each stay.

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"One of the implications of the new strategic objectives for 2020, is that, like the leadership team, we will reorganise more teams across businesses and functions".

But as Oyo tried to expand globally, in part pushed by SoftBank, it spent heavily on incentives to attract hotel owners and customers to its site.

Ritesh Agarwal- led Indian friendliness unicorn Oyo, presently the 2nd leading unicorn after Paytm and valued at virtually $10 (approximatelyRs 70,760 crores) billion in the nation, is apparently giving up countless staff members in India and China, after Japanese very big SoftBank tightened its noose around it. While Son has called Oyo a jewel of his fund and urged it to grow quickly, he has since changed his stance. Most of the Oyo employees involved in the Japan venture have been laid off or relocated, current and former employees said. The tax department and Oyo said the government was examining whether the company was properly withholding and remitting income taxes on payments to vendors. Agarwal added that the company was "looking into each and every allegation" described in a recent NYT article on the company's malpractices. However, what is certain is that a lot of OYO employees might find themselves in hot waters as OYO trims its staff and reduces operating costs.

Oyo will "enhance communications with hotel owners and develop owner loyalty" this year, the company said in the statement. It is reported that Oyo is offering the rooms in hotels that do not have even license to operate and to avoid the scrutiny from authorities it is offering police and other departments free lodging.

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