Bike rental firm ofo has asked its staff that formed part of its Indian operations to leave, a move that further draws attention to the company’s rumored cash crunch. Individuals with knowledge of the matter told TechNode that the company is winding down operations in the region and that most of the company’s staff have been laid off.
In June, a member of ofo’s senior management informed local managers that he would be visiting to discuss the company’s roadmap in the region. He instructed employees to retrieve the company’s bicycles under the pretense that the company would be starting to charge for trips, which were free during its first few months of operation. However, employees were then informed that they would be required to leave.
Ofo has now stopped operating in all cities but Pune, in the western state of Maharashtra. The company launched its city operations in the region in April. ofo promised that it would provide staff, the majority of whom were employed as consultants, with official offer letters. It also said employees would be shown an operational roadmap for the next few years. These didn’t materialize, and individuals were not given the option to relocate to other areas in which the company operates after they were fired.
The company’s website states that ofo has bikes in Bengaluru, Dehli, Chennai, Pune, Ahmedabad, Coimbatore, and Indore. It initially launched pilot programs in gated communities, university campuses, and hospitals. It partnered with Indian mobile wallet and e-commerce company Paytm to facilitate payments.
An ofo spokesperson responded by saying that the company’s rapid expansion in the last year gave it a better understanding of its international business. “Our focus now is on our priority markets and moving towards profitability. We are communicating with our local markets about our plans moving forward,” the spokesperson commented. The company said that it had no intention to deceive its employees during the bike collection process, and was trying to optimize its operations in a period of uncertainty, adding that it aims to exit the market responsibly.
This is not the first time there has been news of layoffs at ofo’s international offices. In June, a source told TechNode that the company had slashed nearly half of its 60-strong team in Singapore. Ofo co-founder Yu Xin denied claims that it was laying off 50% of its staff in China due to cash trouble and that the company’s international operations were being shut down following the departure of chief operating officer (COO) Zhang Yanqi. The company countered news of the layoffs by sending lawyers letters to media companies involved in writing what the company referred to as slanderous and defamatory articles.
ofo recently started selling advertising on its bicycles and in its apps, attempting to boost revenue amid increasing cash strain. Talk of the company’s cash problems has made news in the past few months. People close to the matter said that the company has paid off just 20% of its RMB 3 billion debt. ofo also mortgaged its bicycles for an RMB 1.77 billion loan from Alibaba.
The bike rental industry has become increasingly frenzied in the past few months. Some local governments in China, which is the company’s biggest market, have gotten involved by imposing rules that prohibit advertising on bikes, banned new bikes being brought into cities, and also stipulated the lifespan of bikes in some instances.
Update July 10, 2018, 15:44: Added an additional response from ofo.