The Covid-19 pandemic has hit the online lending industry hard. While more people and businesses are seeking loans to make up for lost income, online lenders are seeing defaults spike and slowing down the issuing of new loans.
As a result, these lenders are making drastic moves to survive. In Southeast Asia, startups like Akulaku and Funding Societies had to lay off employees to keep their businesses running. Oriente, a prominent and well-funded online lending firm started by a co-founder of Skype, isn’t spared either.
The company tells Tech in Asia that it has retrenched a little over 20% of its employees since Q4 of 2019. However, three sources within the firm say that about half of over 2,000 employees will be let go by the first half of this year.
The ongoing cuts, which have been carried out in waves, sweep across its offices in Shanghai, Taipei, Hong Kong, Singapore, Jakarta, and Manila. Its office in Changsha, China, is being shut down.
Oriente’s spokesperson says that not all of the layoffs had to do with Covid-19. Some sales staff were made redundant as a result of technology.
On whether more layoffs are on the way, he adds that due to the uncertainty around the crisis, the company expects more changes in the coming months and has planned for different scenarios. “We hope for the best, but we must plan for the worst,” the spokesperson says.
Employees tell us that they are unhappy at how the retrenchments have been conducted. “We feel we have not been treated right by HR and the co-founders,” one source says.
The company told affected workers that because of limited resources, it’s asking them to forgo the salary owed to them unless they sign a release agreement to shorten the notice period or accept lesser amounts than what’s stipulated in their employment contracts. They add that the company isn’t forking out severance payments.
The company’s spokesperson denies these claims. “All settlements are determined based on local employment laws and contractual obligations, which are fully honored,” he says, “Our priority has been to make sure those who are impacted are fully supported.”
“All employees are aligned with our revised corporate strategy and united in our efforts to get through this crisis,” he adds.
Regardless, Tech in Asia understands that a top management executive has said in an internal meeting in April that the company expects that some employees won’t sign the release agreements and may even air their grievances with labor tribunals.
However, the spokesman says all affected staff have signed the agreements.
Oriente has been delaying salary payments amid Covid-19. Because of the lockdowns in various cities, it has been unable to run loan issuance and collection, which it primarily does in physical locations like malls and shops, sources say.
The spokesperson reveals that the company has furloughed some of its employees. Founders will not take any pay for the rest of the year, while the entire senior management team will take a 30 to 50% pay cut.
Caught by surprise
The layoffs, and the way it was done, have caught some retrenched employees off-guard. The company seemed well-funded: It announced a series A raise of US$105 million in November 2018. Among its backers are prominent retail conglomerates like Philippines’ JG Summit, Indonesia’s Sinar Mas Group, and Malaysia’s Berjaya Group.
Communications from management have not been forthcoming. “No one in the company bothered to address the employees on the mass terminations,” a source says. Laid off staff were told the news during one-to-one meetings.
The spokesman responds, “Because it’s an ongoing process [since Q4 2019], there is no internal communication broadcasted to all employees.”
What added to the confusion was how Oriente couldn’t offer better retrenchment benefits despite recently announced the raising of US$50 million as part of an “ongoing series B round.” Employees are doubting if all of that money is new – after all, the fundraising for the round has been happening since last year.
The spokesman replies: “We have been extremely fortunate to have secured additional funding recently from new and existing investors.”
The money will be used to mitigate anticipated headwinds on liquidity, and to demonstrate the company’s potential to “overcome and outperform the market in a recession.”
Despite having offices in several countries, Oriente’s main operations are in Indonesia and the Philippines, where it operates with the brand name Finmas and Cashalo respectively. Both countries have implemented lockdown or social restriction procedures due to Covid-19.
Recently, Oriente has started to operate in Vietnam with the brand name Finizi. However, sources said that the service is still in beta, and it only has around 25 employees there. Offices in Shanghai, Hong Kong, and Singapore were used as developer and data science centers.