Cab-aggregator Ola is shutting down the operations of TaxiForSure, which it acquired about 18 months ago. Ola will also cut about 700 jobs in the firm.
Ola, which is deemed to be India's largest cab-hailing services, bought TaxiForSure in a deal worth $200 million in March 2015. During that time, Ola aimed to cement its status as India's leading taxi-hailing services and gain leadership over market rival Uber, Mint reported.
However, ever since its acquisition of TaxiForSure, Ola has been cutting down on its operations. The company's employees who are being shown the door include TaxiForSure's call centre employees, workers in the driver relations department and business development units, sources with direct knowledge of the matter, were quoted as saying by the publication.
As an independent brand, Ola had closed TaxiForSure across various cities in the country and integrated TaxiForSure's business offering on its own app.
"Since the acquisition, Ola has been unclear about the brand-positioning of TaxiForSure. Silently, the TaxiForSure fleet was transferred to Ola supply and even incentives were more lucrative for Ola vs. TaxiForSure," the Economic Times quoted an Ola executive as saying.
With the layoffs, the company is expected to save about Rs. 30 crore a month.
"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," Ola spokesperson said in a statement.
Ola threatened by Uber-Chuxing deal
U.S.-based Uber Technologies, earlier this month, announced it was merging its China business with its rival Didi Chuxing. The value of the merged entity is estimated to be $35 billion, according to media reports.
With this deal, Uber is now the largest shareholder in Didi, with a 20 percent stake. However, Didi Chuxing happens to be an investor in Ola as well.
Hence, the Ola-Uber competition will only intensify the battle for market share. Ola, on its part, has been restructuring its business to remain dominant in the market, Mint added.