The COVID19 has struck the economy especially Uber’s
Coronavirus is definitely hitting startups hard, as Uber announces lay offs of 3,700 employees or around 14% of their 26,900 strong workforce.
Ruffin Chaveleau, head of Uber’s customer service, first delivered the news via a three-minute Zoom call to at least 3,500 employees last May 6. Most of the employees laid off are from CommOps and Recruiting roles.
The selection was based on a lottery, and the severance package is generous: 10 weeks plus paid healthcare until the end of the year. But a lot of employees are disgruntled at how the company handled the layoffs, especially that the layoffs are announced suddenly en masse.
Aside from the layoffs, the company has already implemented a hiring freeze to cut costs. Uber also announced that CEO Dara Khosrowshahi will forgo his base salary for the rest of the year which amounts to US$1 million based on the 2019 figures, though the CEO earns most of his money from bonuses and stock awards.
But this may not be the last round of lay offs for the beleaguered company, who is already suffering from a drastic decrease of 80% from global gross bookings, and incurring a net loss of US$ 2.9 billion last May 7 due to the stay-at-home policy to fight the spread of Covid-19. In fact, Business Insider has reported that there will be another batch of layoffs by May 18. But no formal announcements from the company has been made yet.
But the cost cutting plans has been revealed since April 28 wherein company executives has been planning to lay off a total of 5,400 employees, or 20% of its workforce. This move would save the company an estimated US$1 billion in labor costs. This report was paired with the resignation of Uber CTO Thuan Pham who is the longest serving executive in the company since 2013.
And as consistent as it is with the plan,
Before the cost-cutting plan was released, Khosrowshahi has already announced last March in a call with analysts that even with the most dire scenario playing out with an 80% reduction of trips, the company would stay afloat 2020 with $4 billion in unrestricted cash, plus $2 billion in revolving credit.