Uber has announced that it is laying off 3,000 employees as part of cost-cutting measures to cushion itself against the economic effects of COVID-19. The announcement was made by Uber’s CEO Dara Khosrowshahi and was first reported over the weekend by the Wall Street Journal.
The ride-hailing service has been going through a difficult period. As COVID-19 hits new heights in many parts of the world, governments are urging people to stay home in an effort to contain the spread of the virus.
It seems like a lot of people are heeding this call with many opting to work from home when possible. But this has had a huge negative effect on Uber, a company that relies on the movement of people to make money. The company has already confirmed that it has seen an 80% drop in its ride-hailing business over the last few months. Even though some states are starting to reopen, it’s still not enough to jumpstart growth.
The company noted that the decision to lay off another 3,000 employees was hard, but necessary in securing its future. The move also comes barely two weeks after the ride hailing company announced additional layoffs of up to 3,700 employees. The layoffs mean that Uber has had to send 14% of its global workforce home.
They also said that if nothing changes with the COVID-19 situation, the ride-hailing company will be forced to send over a quarter of its entire global workforce home in the month ahead. They are also undertaking additional cost-cutting measures, including closing down up to 45 offices around the world. The giant is also planning to reshuffle several departments in an effort to “refocus its resources” towards “the core of its business.”
Despite the increased drop in ride-hailing, Uber has been doing quite well with its Uber Eats food delivery service. Since a majority of people are already at home, the demand for takeout is high and as such, the company has seen an uptick of growth in that division. A statement released by Uber confirmed that Uber Eats has seen a 54% rise in business and the trend is expected to continue over the coming weeks.
However, even with this growth, it seems the company is still in stormy waters as far as growth is concerned. Uber Eats is a relatively new service and accounts for a very small percentage of Uber’s overall business. Even with its 54% growth, it hasn’t been enough to shore up losses in the ride-hailing department, one of the main core divisions of their operations.
The effects of COVID have been felt across the board too. Lyft, Uber’s main rival, also announced that it was laying off up to 1,000 employees in its cost-cutting efforts. The pandemic is, however, slowing on a global scale but there’s no doubt that the effects it has had on the economy will take a long time to fix.