BENGALURU: Ola has shut down its TaxiForSure business and has laid off 700 employees, according to three people directly aware of the developments at India’s largest cab aggregator.
This move comes nearly a year and half after Ola acquired its crosstown rival TaxiForSure for $200 million to gain market leadership against rival Uber, the most-valuable startup in the world.
Since the acquisition, Ola has been shutting down TaxiForSure as an independent brand across various cities and integrating TaxiForSure offerings to its own app. The unit had also witnessed an exodus of senior management within months of its acquisition, including the departure of CEO Arvind Singhal.
“Since the acquisition, Ola has been unclear about the brand positioning of TaxiForSure,” said a top executive at the company. “Silently, the TaxiForSure fleet was transferred to Ola supply and even incentives were more lucrative for Ola vs TaxiForSure,” this person added.
“With all TFS driver-partners and customers coming on board the Ola app, the integration is now complete,” Ola Spokesperson said in a statement. “..We have absorbed as many TFS employees for open roles in Ola to support our growth. For positions that cease to exist as a result of this transition, we are offering enhanced severance benefits and outplacement services to help affected employees pursue new career opportunities,” the statement said.
The total cost reduction with these layoffs is close to Rs 30 crore a month, said an investor with direct knowledge of the company’s financials.
“While Taxiforsure application and option to book an Taxiforsure cab is still present in Ola application, this will be phased out over time,” this person added.
This development also comes at a time when the SoftBank-backed aggregator is looking to reduce its cash burn as the battle with rival Uber is set to intensify in the country. Especially so after the latter sold its cash-guzzling China operations to Didi Chuxing, which is also a minority investor in Ola.
ET had reported in March that Ola was restructuring its business to step up focus and investment in its core taxi service after pulling down the shutters on experiments such as food and grocery delivery.
Since then, it has launched new categories to widen its scope of offerings and also rolled out value added services to improving customer experience, such as by providing free WiFi for customers of its premium Prime service.
It also has been aggressively investing in its taxi leasing business, a key area of focus for CEO Bhavish Aggarwal. Ola had posted net losses of Rs 796 crore on revenues of Rs 421 Crore for the fiscal year ended 2015.
[Source: Economics Times]