Behind Oyo’s layoffs in Malaysia, which affected hundreds of people

India-headquartered budget hotel chain Oyo cut hundreds of employees – or most of the team – in Malaysia this year, five affected ex-staff tell Tech in Asia.

The retrenchments, which have gone unreported by the media, were meant to remove excess overhead and help Oyo reach profitability. It was also meant to slash costs amid a pandemic that has ravaged the travel industry.

The company declined to reveal exactly how many people were affected, but it says its current workforce has around 100 people. Sources say that the company peaked at 600 employees last year.

Photo credit: Oyo

The first wave of job cuts, which came in January before the full effects of the pandemic were felt, were part of a global cost-cutting initiative.

“We realized that we hired more people than we required to have a sustainable and profitable company. We apologized for that,” Mandar Vaidya, Oyo’s chief executive for Southeast Asia and the Middle East region, tells Tech in Asia.

Furlough with no job guarantee

On April 9, Oyo’s CEO and co-founder Ritesh Agarwal told the Financial Times that the company intended to have “no or negligible layoffs” as a result of Covid-19. This applied to all of Oyo’s operations, including Malaysia, Vaidya adds.

The company tells us that more departures happened in January rather than in April, when another round of retrenchments occured. Regardless, the cost-cutting measures have happened throughout 2020.

As Oyo’s revenue plunged by 50% to 60% due to the pandemic, it laid off or furloughed hundreds of employees in Indonesia, Thailand, and the Philippines. It’s also shedding the majority of its staff in the UK, the company previously said.

The furloughs in Malaysia came with no job guarantees at the end of the process, according to former employees. That “was a deal breaker for me. I was not willing to take that risk,” said one former staff member.

Some employees who rejected the furlough, which came with limited entitlements, had resigned instead, Vaidya says.

Oyo did not tell Tech in Asia what benefits came with taking the temporary leave, but ex-employees say furloughed staff did not receive their full salary. Instead, they got an “ex-gratia” payment that amounted to 45% of their one month’s salary doled out over three months, with full medical benefits.

Gradual fall

According to Vaidya, Southeast Asia has contributed to Oyo’s growth. And Indonesia and Malaysia in particular are its most important markets in the region, accounting for 45% and 20% of its revenue in the domain, respectively.

After China, Southeast Asia is the second market where Oyo saw an impact on its business due to the pandemic. In late February 2020, the company had seen the early signs of a plunge in demand, which was made worse over the following months when countries began applying lockdowns and social restrictions, Vaidya says.

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