Uber cuts 3,000 jobs in second major wave of layoffs in two weeks

Uber has cut another 3,000 jobs from its workforce
REUTERS
Imogen Braddick18 May 2020

Uber has cut another 3,000 jobs from its workforce as the coronavirus outbreak continues to slash demand for rides.

The San Francisco company has cut 25 per cent of its workforce since the year began, after removing 3,700 people from the payroll earlier this month.

The ride-hailing giant will be refocusing on its core business, moving people and delivering food, said chief executive Dara Khosrowshahi in a note to employees.

Some 45 offices around the world will be closing or consolidating, and almost all departments will be affected by layoffs.

The changes are designed to save $1 billion annually
AP

The company is closing its Incubator and AI Labs and will pursue strategic alternatives for its job recruiting app, Uber Works, Mr Khosrowshahi said.

“This is a decision I struggled with,” he said.

“Our balance sheet is strong, Eats is doing great, Rides looks a little better, maybe we can wait this damn virus out…I wanted there to be a different answer…but there simply was no good news to hear.”

The rides business, Uber’s main profit generator, fell 80 per cent, he said.

“Ultimately, I realised that hoping the world would return to normal within any predictable timeframe, so we could pick up where we left off on our path to profitability, was not a viable option,” Mr Khosrowshahi said.

Uber lost 2.9 billion dollars (£2.4 billion) in the first quarter as the pandemic hit its overseas investments.

Europe starts to ease itself out of Coronavirus lockdown

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Companies that rely on the sharing economy have been hit hard by the pandemic, as people stay indoors and shy away from shared services to reduce the spread.

Lyft, Uber’s main US rival, laid off 982 people last month, or 17 per cent of its workforce because of plummeting demand.

Careem, Uber’s subsidiary in the Middle East, cut its workforce by 31 per cent.

Uber estimates it will incur 175 million to 220 million dollars (£143 million to £180 million) in charges related to the restructuring, including severance, other benefits and office closing costs, according to a federal filing.

Combined with the earlier layoffs, the changes are designed to save 1 billion dollars (£820 million) annually.

Demand for Uber Eats has risen as more people stay at home
REUTERS

One silver lining is that Uber’s Eats business has become more important to people staying home and delivery is here to stay, Mr Khosrowshahi said.

“We no longer need to look far for the next enormous growth opportunity: we are sitting right on top of one,” he added.

He cautioned, however, that the growth in Eats does not come close to covering expenses.

“I have every belief that the moves we are making will get Eats to profitability, just as we did with Rides, but it’s not going to happen overnight.”

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