Grab to lay off 360 employees to cope with COVID-19 impact
|Ride-hailing Grab, Be, GoViet simultaneously reopen from April 23|
|Grab and other ride-hailing platforms in Vietnam can now operate as legal businesses|
|Hanoi to end technology taxis operation effective April 1|
|South-East Asia's most valuable startup with a valuation of US$14bil (RM59.74bil) informed staff of the cuts at a townhall meeting, according to people with knowledge of the matter. Photo: Reuters|
Ride-hailing giant Grab will be letting go of about 360 people, or under 5% of its staff, CEO and co-founder Anthony Tan announced earlier today in a letter to employees.
“Over the past few months, we reviewed all costs, cut back on discretionary spending, and implemented pay cuts for senior management,” Tan wrote. “In spite of all this, we recognize that we still have to become leaner as an organization in order to tackle the challenges of the post-pandemic economy.”
In addition to the job cuts, SCMP News Agency also revealed that the Singapore-based company plans to eliminate some non-core projects, consolidate functions, and reallocate staff to newer initiatives, like delivery.
|Demand for ride-hailing services, which is Grab's main business, has fallen amid the pandemic. Photo: The Straits Times|
“It has become clear that the pandemic will likely result in a prolonged recession and we have to prepare for what may be a long recovery period,” Tan said in a blog post. “Over the past few months, we reviewed all costs, cut back on discretionary spending, and implemented pay cuts for senior management. In spite of all this, we recognize that we still have to become leaner as an organization to tackle the challenges of the post-pandemic economy.”
The cuts are the latest sign of troubles among the portfolio companies of SoftBank Group Corp. Founder Masayoshi Son had been perhaps the most enthusiastic backer of ride-hailing companies, investing about $3 billion in Grab and billions more in Uber Technologies Inc. and China’s Didi Chuxing, shared Yoolim Lee from Bloomberg Quint.
Grab had become the most valuable startup in Southeast Asia as it expanded beyond ride-hailing into food delivery and other services. SoftBank booked profits as the valuations for such startups surged. But demand for ride-hailing services collapsed this year as countries around the world went into lockdown. Bloomberg Quint cited from a report of SoftBank showing that a record operating loss of 1.36 trillion yen ($12.7 billion) for the latest fiscal year as it wrote down the value of Uber and WeWork.
|Grab will focus on adapting its core verticals such as ride-hailing, payments, and financial services to the new normal. Photo: Afif Kusuma / Unsplash|
In April, Tan said that Covid-19 presented the “single biggest crisis” Grab had faced in the eight years since its founding. He warned at the time that the startup would have to make “tough decisions” about cutting costs and managing capital. According to Bloomberg, the company had more than 7,000 employees before the layoffs.
Grab employees who are laid off will receive severance pay, as well as an enhanced separation payment; a waiver of annual cliffs for equity vesting; medical insurance coverage until the end of the year; encashment of unused annual leave and GrabFlex credits; and, for expecting parents, encashment of their parental benefits, as of the last day of employment.
“I assure you that this will be the last organisation-wide lay-off this year and I am confident as we execute against our refreshed plans to meet our targets, we will not have to go through this painful exercise again in the foreseeable future,” Tan said.
|Anthony Tan, CEO and co-founder of Grab. Photo: Ore Huiying/Bloomberg/Forbes Asia|
Grab is the largest ride-hailing platform in Southeast Asia, and like other travel-related companies, including Uber, Lyft, Oyo and Airbnb, its on-demand ride business has been hit hard by the pandemic. Grab also operates several other businesses, however, including deliveries and digital financial services, which is is currently reallocating resources toward because demand for them has increased during the pandemic and stay-at-home orders.
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