Softbank backed Ola, a leading cab service provider in India has decided to lay off 35 percent of its workforce, around 1400 employees amidst this pandemic. The ripple effect of domestic lockdown has been particularly straining for the transportation industry, thus leading to a 95 percent drop in revenue for Ola in the last couple of months.
Recently via an official email, the CEO expressed concern over the drop in revenue and claimed layoff is inevitably necessary for the company to stay aboard. This comes as hardly a surprise, as even Uber Technologies, the biggest competitor of Ola recently announced a 23 percent global workforce layoff to maintain some level of profits.
Ola CEO proclaimed about this decision being the only solution to maintaining a certain level of cash reserves to invest in potential areas. Ola will be executing these layoffs in the next 2 weeks. Other Indian unicorn companies such as Swiggy and Zomato have also resorted to layoffs in the last few weeks to cut costs, claim sources.
However Ola has made the decision of providing a three month fixed salary payment to the impacted employees. In addition, all affected employees will be given the option to use their insurance covers (for themselves and their families) until 31 December 2020 or before starting their next job, whichever is earlier, to help ease the financial impact of this decision, on health and other hazards in this period.
The transportation industry in India has not been functioning since the last 2 months, thus leading to an increase in operating expenses like employee salaries, but without any revenue on the other side.
The government has recently extended domestic lockdown for 2 more weeks, thereby increasing strain for transportation service companies.
Ola executives are predicting a reduction in demand over the next couple years, considering that the requirement of cabs for people to travel or even use an external cab service is rather limited presently.
With the increase in work from home practice, many companies are already predicting a reduced need for offices from now on. This assumption has been made due to the change in trends with the excessive use of online meeting tools, video conferencing, and other remote technologies that can be done online.
Ola executives claim that this pandemic will definitely leave the industry in shambles and everything seems very unclear and uncertain presently. However experts believe that private transportation services are here to stay, but it is again an assumption which can only be tested in the long run.