Several companies in India including L&T Infotech, Vodafone Idea and Tata Consultancy Services have cut down on employee accommodation with SoftBank-funded Oyo Hotels and Homes,  The Economic Times  reported on Tuesday.

The corporates have reduced the amount of business they used to give to the start-up on account of multiple issues including safety of women and poor quality of service, the report said.

Other issues cited by ET’s sources are Oyo’s dispute with hotel partners and frequent changes in teams. These problems have affected Oyo’s overall business which had remained relatively slow over the last year.

Effect on revenue

With corporates cutting ties with the company, Oyo’s overall revenue will be significantly affected as the corporate segment contributes nearly 18 per cent to Oyo’s offline business, ET reported. Oyo, however, had claimed that its business had grown 80 per cent in revenue in the past year.

According to Oyo’s recent filings, the company may not make a profit in India up to 2022, Reuters had reported.

Questionable business practices

Among the major companies, L&T was the first to cut ties with Oyo over safety issues for its female employees, according to the ET report.

The report mentioned a particular incident in Pune last year where the safety of a female employee was at risk. L&T had conveyed the incident to Oyo over email.

According to a recent  New York Times  report, Oyo’s growth has been fuelled by questionable practices including registration of unlicensed hotels, service issues, bribing officials and toxic work culture, among others.

A former operations manager at the company, in the report, had claimed that under pressure of listing rooms on the platform, Oyo employees tend to list hotels that lack amenities such as air-conditioning, water heaters or electricity.

The employee had also highlighted an incident where a long-term female guest from Noida had called him and said that three men had raped her in her room. The matter was taken to the police. However later, the case was shut and the guest had moved out, NY Times reported.

Oyo stated in the ET report that it had multiple security checks in place including an “in-app SOS button on check-in to intimate Oyo Safety Response Team or the Police about any emergency, in-person on-ground assistance and CCTV surveillance and security in required areas, among other things”.

A few hotels have filed fraud cases against the platform for unlawfully charging extra amount citing ‘lack of services’ which have been dismissed by Oyo executives as ‘noise’, according to the NY Times report.

Oyo has also lost a significant chunk of business from Vodafone’s networking division which was reduced to ₹11 lakh in January, compared to ₹25 lakh in October, ET reported.

Bloomberg had recently reported that Oyo had laid off 12 per cent of its staff in India over corporate restructuring and was planning to cut another 12,000 jobs in the upcoming months.

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