Bhavish Aggarwal, the CEO of Ola cabs. Photo: AFP

The prolonged lockdown in India to contain the spread of Covid-19 has forced many businesses to lay off staff to reduce costs. The latest to do so is ride-hailing firm Ola Cabs.

The Bangalore-based company has said it will lay off 1,400 employees – about 35% of its workforce – and cited the coronavirus pandemic as the reason. The lockdown, which began on March 25, has been extended three times, bringing public transport, including ride-hailing cabs, to a halt.

Ola co-founder and CEO Bhavish Aggarwal said the two-month nationwide shutdown has led to a 95% drop in revenues and affected the livelihoods of millions of drivers. The layoffs will be limited to the company’s mobility and food operations in India.

Ola Electric, a separate branch of the company, will not be affected. It will continue to invest in its R&D arm to boost innovation and engineering.

Aggarwal has assured that this will be a one-time Covid-19-related exercise. He said with employees of most companies working from home and people avoiding travel, the impact of this crisis will likely be long term as the world is not going to return to the way it was before the pandemic anytime soon.

For the impacted employees, Ola will provide three months’ fixed salary, irrespective of the notice period. They will also have their medical, life and accident insurance cover till December 31.

With the recent relaxation of the shutdown, both Ola and its rival Uber have resumed service in some cities. As of today Ola is operational in over 160 cities under strict safety protocols. This includes the driver and passengers wearing masks, physical distancing and regularly sanitizing vehicles.

It may be recalled that last year Ola had laid of 350 employees as part of a restructuring exercise. Ola’s rival Uber recently laid off 3,000 people globally, but it is not yet clear how it is going to impact its operation in India. Uber had earlier sold its online food delivery arm Uber Eats to Zomato.

A host of other start-ups including SoftBank-backed WeWork, online food delivery platforms Zomato and Swiggy have laid off employees to cut costs. Travel and hospitality firms such as MakeMyTrip and Oyo have also cut many jobs and furloughed thousands of employees.

The current lockdown is expected to end by May 31 and the total number of confirmed Covid-19 cases crossed 106,000 on Wednesday. The country’s commercial capital Mumbai is one of the cities worst affected by the pandemic.

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