May 20, 2020 / 9:14 AM / 7 days ago

SoftBank-backed Ola follows Uber with job cuts as revenue sinks

FILE PHOTO - A policeman speaks to an Ola employee outside its office in Mumbai, India October 29, 2018. REUTERS/Francis Mascarenhas

BENGALURU (Reuters) - SoftBank Group-backed Indian ride-hailing company Ola will cut 1,400 jobs, or about 35% of its workforce, as it navigates a strict coronavirus lockdown that has halted 95% of its business, company chief Bhavish Aggarwal told employees on Wednesday.

Launched a decade ago in Mumbai, Ola has been fighting for dominance with Uber (UBER.N) in dozens of Indian cities. It also has operations in Australia, New Zealand and the UK, partnering with around 2.5 million drivers.

Both ride-hailing companies have been hammered by a two-month-long lockdown that has kept 1.3 billion Indians indoors and halted app-based cabs and rickshaws. Local media reports said Uber has cut 700 of its estimated 2,000-2,500 employees.

The U.S. firm, which has sold both its Chinese and South-East Asia businesses to local rivals, on Monday made more job cuts that meant it has reduced staffing by more than a third globally since the start of the crisis.

Uber declined to say whether it has cut jobs in India.

“The prognosis ahead for our business is very unclear and uncertain. It is going to take a long time for people to go out and about like before,” Bhavish Aggarwal, Ola’s co-founder and CEO, said in a note to employees on the company’s blog.

Sources at SoftBank’s Vision Fund, which holds stakes in both Uber and Ola, said it previously considered pushing for a merger of the two companies, but abandoned the idea due to concerns it would create a monopoly and be vetoed by regulators.

Ola joins a list of local start-ups, including the local franchise of another SoftBank-backed (9984.T) venture, WeWork, restaurant aggregator Zomato and food delivery service Swiggy that have laid off employees in recent weeks.

Analysts say many were ripe for stripping down after feasting on a boom in private equity funding seeking to cash in on India’s growing middle class and fast-growing cities.

Reporting by Chris Thomas and Anirban Sen in Bengaluru; Editing by Patrick Graham and Arun Koyyur

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