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Microsoft's proposed investment in OYO expected to cheer up start-up and hospitality sector

The investment is likely to value OYO at $9 billion

Pentagon-Cloud Contract

Reports of Microsoft planning to invest in OYO, even as the hospitality chain has been considering an Initial Public Offering (IPO), are expected to cheer up the start-up ecosystem and the hospitality sector in India. Reports have stated that Microsoft is already in advanced talks with OYO and the investment is likely to value OYO at $9 billion. 

Both OYO or Microsoft have not come out with an official statement, but experts with whom THE WEEK spoke feel that such an investment may cheer up the spirits of the hospitality segment in the country, which has been battered by the pandemic, and would also pave way for an investment by Microsoft in the technology start-up space. 

Branding expert Harish Bijoor feels that the hospitality sector in the country is in doldrums for now and a business segment such as this cannot operate in an uncertain 'one day open and one day closed for business' sentiment. “In the wake of this prevailing business environment, the news of Microsoft's investment in OYO is a good one. It points in the way of a 'normalcy will return' mindset. OYO today suffers both an image and business loss. A Microsoft crutch will be a very valuable support. An IPO with a Microsoft backbone is an IPO to look forward to, as normalcy returns to the mid and bottom end hospitality segment as well,” Bijoor told THE WEEK.

A few experts feel that Microsoft’s proposed investment in OYO must be viewed more as a technology investment than a venture into the hospitality sector. “With China tightening its norms and policies around fintech, retail and technology investments, India will be a huge beneficiary of investments into the technology space. Together with the growing success of technology companies in the IPO space, investments from across the globe will rain on potential companies in India given its consumption capabilities, vast start-up ecosystem, free market and the high adoption rate in urban, semi urban and rural areas in using technology-driven processes, be it in e-commerce, delivery, logistics, fintech and other digitally enabled practices. India should leverage on this opportunity and rival major economies by transforming the economy digitally,” said Subramanyam Sreenivasaiah, CEO of Ascent HR.

Experts point out that after the recent Zomato IPO, many soon-to-be unicorns and unicorns are expediting their plans for public issues. “Companies like Microsoft are looking at investing early in assets which are leveraging new technologies. This will help raise the spirits for the hospitality sector and at the same time, the start-up ecosystem in general. This will be a big moment for Microsoft in India because this will be the first big ticket investment in a reputed brand by them,” observed Aditya Narayan Mishra, director and CEO of CIEL HR Services. 

Undoubtedly, Microsoft is a dominant player in the large enterprise and the traditional SMB space, but has a negligible space in the start-ups ecosystem. 

“Among the key players, be it IBM, Google and Amazon Web Services (AWS), Microsoft is perceived to be a laggard in the Indian start-up space. Given the precipitous rise in the star-up ecosystems, particularly exemplified by the Zomato IPO, Microsoft has decided to get its act together by investments in OYO. My sense is that these investments will bring together provision of cloud based resources in addition to financial investments. Given the forthcoming OYO's IPO, Microsoft is likely to make decent returns in addition to gaining a strategic customer in the Indian start-up space,” pointed out Alok Shende of Mumbai-based Ascentis Consulting. 

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