Uber is expecting that the layoffs will cost the company “approximately $20 million” in severance and other termination benefits.
SoftBank-backed global ride-hailing company Uber on Wednesday said that it has laid-off around 3,700 employees (around 14 per cent of its approximately 27,000 employees globally) from its customer support and recruitment teams as a result of Covid-19 impact on the business. The company said that workforce reduction is “due to lower trip volumes in its Rides segment and the company’s current hiring freeze.” The exercise is part of its plans to cut operating expenses in response to the “economic challenges and uncertainty” resulting from the COVID-19, Uber said in its SEC filing seen by Financial Express Online.
Uber also announced that its CEO Dara Khosrowshahi has agreed to waive his base salary for the rest of 2020. The company, which has been looking at ways to reduce losses following a disappointing IPO last year, is expecting that the layoffs will cost the company “approximately $20 million” in severance and other termination benefits.
“This is one part of a broader exercise to make the difficult adjustments to our cost structure (team size and office footprint) so that it matches the reality of our business (our bookings, revenue and margins),” Khosrowshahi said in a memo to employees. He added that the company is looking at “many scenarios and at each and every cost, both variable and fixed.” A copy of the letter was seen by Financial Express Online.
Recently, its rival Lyft had announced that it is laying off 17 per cent of its staff – close to 1,000 employees to survive the havoc caused by the Covid-19 outbreak.
Uber had recently announced that it will pull out its food delivery business – Uber Eats from eight markets including the Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Uruguay and Ukraine by June 4, 2020 “to reinvest these savings in priority markets where we expect a better return on investment.” These eight markets had a share of only 1 per cent of gross bookings and 4 per cent of adjusted EBITDA losses in Q1 2020 for its Uber Eats business. Uber Eats UAE business will be transferred to Uber’s subsidiary Careem that it acquired for $3.1 billion in 2019.
Here’s the full copy of Khosrowshahi’s letter to employees:
I wanted to let you know that we just announced the elimination of around 3,700 roles in CommOps and Recruiting, and the closure of 40% of our Greenlight locations. You can read the emails that were sent to those teams here.
With the reality of our Rides trips volumes being down significantly, our need for CommOps as well as in-person support is down substantially. And with our hiring freeze, there simply isn’t enough work for recruiters.
This is not in any way a reflection of these employees’ efforts or contributions to getting us to where we are, as a service that everyone associates with movement and earnings opportunities. We wouldn’t be here without their efforts and I want to personally thank them for everything they’ve done for Uber.
We have worked hard to put together generous severance packages with a longer period of healthcare coverage to help provide a bridge, and we are also supporting EXTs whose roles are affected by today’s decision.
That’s today’s news. But, as I said at yesterday’s All Hands, this is one part of a broader exercise to make the difficult adjustments to our cost structure (team size and office footprint) so that it matches the reality of our business (our bookings, revenue and margins). We are looking at many scenarios and at each and every cost, both variable and fixed, across the company. We want to be smart, to move fast, to retain as many of our great people as we can, and treat everyone with dignity, support and respect. As I said yesterday, you can expect we will have a further, final update for you within the next two weeks.
Days like this are brutal. I am truly sorry that we are doing this, just as I know that we have to do this. And while it’s easier said than done, we have to keep our heads down and keep executing, because that—and nothing less—is what will keep Uber going and get us to the other side.
Given this news, and since we have Q1′20 earnings tomorrow, I thought it would be good to get everyone together again on Friday for a Global All Hands, where we can walk through our financial results and today’s changes, and can continue to answer your questions as openly as possible. Keep an eye out for an invite soon.