The layoffs in Indian startups aren’t limited only to the ed-tech space — other verticals are being impacted too.
Ola is looking to fire 400-500 employees in order to bring down costs, Moneycontrol reports. The move comes following a delay in Ola’s listing plans, and a tough funding environment. Last week, Ola had announced that it was shutting down its Ola Dash and Ola Cars businesses.
“Key managers were asked to draw up a list of people from their respective teams last week who can be let go,” a source said about the upcoming layoffs. Ola is reportedly looking at “leaner and consolidated teams” to keep its “strong profitability intact”, ET reported.
A source further said that Ola has also hit the brakes on investments in overseas markets where it is present, such as the UK, Australia, and New Zealand. “They have stopped spending in international markets. They have a single-digit market share now in countries like the UK and New Zealand,” a second person said. Ola had embarked on an ambitious international expansion plan a few years prior, but hadn’t quite been able to pose a challenge to incumbents in those markets.
Ola didn’t officially comment on the news of the layoffs. “Today our riding hailing business is delivering its highest ever GMV month on month. As we continue to grow, we will look at leaner and consolidated teams and capabilities and scale in a manner that keeps our strong profitability intact,” the company said.
Ola’s move comes comes at a time when cab hailing companies have been suffering worldwide following the coronavirus pandemic. Uber’s stock was trading at $40 when the pandemic had hit, but has now halved in value and trades at just $21. With many people working from home, demand for ride hailing services in major cities has fallen. This has had knock-on effects — the lower demand has led to fewer cabs on roads, which has led to longer wait time for existing customers. There had even been rumours that Uber was looking to exit India entirely, but these had been hotly denied by the company.
But even as its ride-hailing vertical had stalled, through the pandemic, Ola had looked to move outside its core business. It’s two biggest bets had been a grocery delivery service in Ola Dash, and a used-car service in Ola Cars. Both these initiatives, however, have been shut down within a year of their launch. Ola’s Electric division, on the other hand, is creating plenty of buzz, but is also beset with controversy — after one of its scooters caught fire, the Indian government has asked it along with several other EV manufacturers why they shouldn’t be penalized for selling sub-standard vehicles. Ola has also fallen in the monthly electric two-wheeler sales numbers in June, falling from second to fourth position.
It’s amidst this environment that Ola is looking to lay off people in order to cut costs. Ola’s core business of ride hailing is stagnating, and its bets into newer verticals haven’t quite worked out. Ola Electric holds plenty of promise, but is having to navigate charges of substandard vehicles and intense competition from both other startups and incumbent scooter manufacturers. Ola does seem to have been backed into a corner, and by looking to cut costs, it’s likely looking to extend its runway as it prepares for the funding winter.