Uber Technologies will eliminate 3 700 jobs and permanently close 180 driver service centres, the first in a series of cost-cutting measures to be announced in the next two weeks as a response to the coronavirus pandemic.
The reductions will affect 14% of staff around the world, mainly those in support and recruiting, CEO Dara Khosrowshahi wrote in an e-mail to employees on Wednesday. Ridership is down significantly, and the company is maintaining a freeze on hiring, Khosrowshahi wrote in the e-mail.
Of the more than 450 driver centres Uber operates worldwide, 40% will be shut down. The locations, called Greenlight Hubs, are used to sign people up to drive for Uber, teach them how to use the app and address issues that arise on the job. In March, as the virus was spreading in North America, Uber said it was temporarily closing all hubs in the US and Canada.
Khosrowshahi signalled that more “difficult adjustments” would be put forth in the next two weeks. “Days like this are brutal,” he wrote.
This sort of painful day is becoming commonplace. Tech companies have eliminated more than 38 000 jobs in the past two months, according to Layoffs.fyi, which tracks the job market. Lyft, the main alternative to Uber in North America, said last week it was dismissing 17% of staff, furloughing more and reducing salaries. Their longtime peer in the sharing economy, Airbnb, said on Tuesday the company was cutting a quarter of its workforce.
The job losses are sudden for many, but at Uber, they may seem drawn out. After a disappointing initial public offering a year ago, Uber dismissed more than a thousand employees over multiple rounds of cuts that extended from July to what Khosrowshahi described as a “last wave” in October. They were part of a drive toward profitability, which was expected to arrive by the end of this year.
Uber has seen its landscape shift considerably since then. It instituted a hiring freeze in March, withdrew its financial forecast and wrote down some US$2-billion worth of investments in April and said on Monday it would shut food delivery operations in seven countries.
As of 2 May, Khosrowshahi waived his salary for the remainder of the year, the company said. In 2019, he was eligible for a salary of $1-million and a bonus of $2-million, according to a securities filing. Uber is scheduled to report first-quarter financial results Thursday.
The challenges posed by the virus could be matched by a new one this week from Uber’s home state. California sued Uber and Lyft Tuesday for allegedly flouting a state law designed to give gig-economy workers the benefits of employees. If the case is successful, the companies could be on the hook for substantial new costs that further jeopardise their business models. — (c) 2020 Bloomberg LP