May 6—Ride service Uber announced plans to lay off 3,700 employees, or 14 percent of its workforce, due to a COVID-19 driven downturn in its core business. The company’s mass headcount reduction will permanently shutter 40 percent of its remote driver assistance centers. The firm’s staffing cuts come less than a week after rival Lyft declared it would terminate 17 percent of its team members.
Details on Uber’s Lay Offs
In an employee email, Uber CEO Dara Khosrowshahi explained the corporation would be cutting 3,700 staffers from its support and recruitment divisions.
The executive noted the coronavirus pandemic and subsequent shelter-in-place orders had devastated the firm’s taxi business, meaning it does not need as many driver service workers. As a result, it is closing 180 of the 450 Greenlight Hub support centers it operates worldwide. Also, since the company initiated a hiring freeze in March, it decided to make cuts to its recruiting staff.
The Verge reports Uber expects to pay $20 million in severance and employee separation-related costs because of its headcount reduction.
The corporation’s chief executive also said further reductions in the company’s “team size and office footprint” are coming in the next two weeks. In a May 2 U.S. Securities and Exchange Commission filing, the firm noted Khosrowshahi would forego his base salary for the rest of 2020.
Although news of Uber’s layoffs is heartbreaking given the number of people affected, its headcount reductions are not surprising.
Last week, The Information reported the ride-hailing company was considering making a 20 percent headcount reduction following an 80 percent drop in bookings. The publication estimated the San Francisco-based firm would save around $1 billion annually by terminating 5,400 employees. The corporation has sought to find ways to improve its profitability since COVID-19 stay-at-home orders began hurting its business.
Uber expanded its Eats delivery service to include convenience goods, over-the-counter medication, and pet supplies in early April. Later in the month, the corporation began offering retail products and care package transportation to further bolster its revenue. This week, the firm also made plans to revive its taxi business by requiring drivers and passengers to wear face coverings during rides.
To an extent, the company’s post-coronavirus adjustments proved successful; Uber Eats recently experienced a 70 percent surge in orders. But as the corporation only earns one-tenth of the revenue from a ride as it does a delivery, its efforts fell short.
Indeed, the entire sharing economy sector is grappling with unprecedented headwinds due to COVID-19 related disruption.
Uber’s chief North American competitor Lyft revealed it would slash its workforce by 17 percent on April 30. The firm also saw an 80 percent decrease in reservations because of global economic contractions and rider anxiety. Similarly, temporary lodgings service Airbnb cut its staff by 25 percent because of a projected 50 percent decline in annual sales.
With many regional self-quarantine orders still in place across the world, it is an open question as to when Uber and its contemporaries will be able to mount comebacks.