Bengaluru: Ride-hailing startup Ola’s plans to restructure its business to improve profitability ahead of its planned public offering in India, and will trim 5-8% of its 4,500-strong workforce.
According to a person familiar with the developments, the restructuring will impact around 400 employees, only half of whom will be reassigned to other roles in and outside the group.
The person, requesting anonymity, told Mint that there is a “clear drive towards profitability and building a sustainable business” and that the company has launched several initiatives to do so, such as forming committees on governance and ethics.
“In terms of the organisational redesign, there is some amount of transitioning happening. Around 5-8% of people are transitioning, and are being redeployed into various companies within the group, as well as companies outside the group like Ola Electric, which is an independent company now. A substantial number is absorbed across the group… a certain amount of employees will be going outside the company too,” the above mentioned person said.
“Less than 200 (employees) will not be redeployed for various reasons … redundancies of roles, efficiencies coming in and leveraging synergies,” the person said.
An Economic Times report on Friday said that the restructuring exercise could involve job cuts across the group companies, affecting around 10-15% of its workforce or around 350 employees. ANI Technologies Pvt Ltd, the holding company of Ola, currently has around 4,500 employees the report added.
Most of the layoffs will affect Ola’s core marketplace (mobility) business, said two people who are aware of Ola’s operations. “The same (mobility) unit is through which the company plans to go ahead with an IPO,” said the first person aware of Ola’s restructuring plans.
“The company has gone heavy on cost-cutting past couple of months…They have been cutting down on tech costs, especially on Amazon Web Services (AWS) module for their upcoming IPO,” added the source mentioned above.
Ola has been stacking up huge sums of money from multiple new investors in the past couple of months especially for its Ola Electric unit, which is expected to roll out new electric charging solutions and other EV products. Ola is currently in advance stage of discussions with Microsoft to raise around $200 million through which the software major is reportedly picking up a 4.5% equity stake in ANI Technologies Pvt Ltd.
In a response to Mint’s queries, the company said, “With a view to become more nimble and have a sharper focus on growth and profitability, we are redesigning the organisation to build a structure that strengthens and leverages our local and global scale and enables faster decision making across all of Ola’s group companies.”
“Our organisational redesign aims to rightsize all our operations as well as leverage skills sets and experience of mobility employees in available positions in new business verticals,” the statement said.
“The resultant working model will form the foundation of the next chapter in Ola’s growth journey, as we continue to grow our existing businesses at home and around the world,” it added. Earlier this week, Ola Cabs began registering drivers in London, ahead of launching commercial operations in the city.
The development follows ANI Technologies, which runs Ola, reducing its net loss for the financial year 2018-19 by 57% from ₹2,676.7 crore in FY18 to ₹1,160 crore in FY19, as it gears up for a public offering in India. The company reported standalone revenues of ₹2,155 crore for the year ending 31 March, 2019, a 16% increase from ₹1,860 crore for FY18, according to financials filed with the Ministry of Corporate Affairs (MCA) and shared by business intelligence platform, Tofler.