Uber headquarters. Image: © Andrei/Stock.adobe.com
Uber will lay off almost 14pc of its global workforce and close a number of driver support centres.
Uber will lay off thousands of employees and CEO Dara Khosrowshahi will waive his base salary for the remainder of the year, according to a Securities and Exchange Commission filing dated 2 May 2020.
The company, which is due to report its quarterly earnings on Thursday (7 May), said the job losses are part of its plans to reduce operating expenses – a need that has arisen amid the Covid-19 pandemic.
Approximately 3,700 full-time employees in Uber’s customer support and recruitment teams will be let go.
‘This is one part of a broader exercise to make the difficult adjustments to our cost structure so that it matches the reality of our business’
– DARA KHOSROWSHAHI
Uber, which is primarily a provider of transport tech, has been hit hard by social restrictions and lockdown measures limiting travel during the Covid-19 pandemic. A recent report in The Information claimed that bookings worldwide were down 80pc year-on-year.
Khosrowshahi promised “generous severance packages” and extended healthcare coverage to affected employees, and the company has estimated the cost for this at about $20m.
According to an internal memo, tweeted by New York Times tech journalist Kate Conger, he said: “This is one part of a broader exercise to make the difficult adjustments to our cost structure (team size and office footprint) so that it matches the reality of our business (our bookings, revenue and margins).”
Employees have been told to expect a further update on these measures in two weeks.
Layoffs have now hit Uber, with about 14 percent losing jobs today. Dara’s note to employees: pic.twitter.com/6kxpstqhCc
— kate conger (@kateconger) May 6, 2020
‘There simply isn’t enough work’
Uber’s global workforce has rocketed in recent years, growing from 159 employees in 2012 to 26,900 employees as of 31 December 2019. According to the company’s most recent annual report, about 16,200 of those employees were based outside the US.
In February, Khosrowshahi boldy stated that “the era of growth at all costs is over” and that the company – which has infamously reported substantial losses – would be profitable by the end of 2020.
Uber’s cutbacks will also include the closure of 40pc of its Greenlight locations. This network of hubs around the world enables in-person assistance for Uber drivers, helping with everything from onboarding to classes on how to improve driver ratings.
“With the reality of our rides trips volumes being down significantly, our need for CommOps [customer support] as well as in-person support is down substantially. And with our hiring freeze, there simply isn’t enough work for recruiters,” explained Khosrowshahi in the staff memo.
‘Days like this are brutal. I am truly sorry that we are doing this, just as I know that we have to do this’
– DARA KHOSROWSHAHI
Uber drivers have also been impacted by the company’s loss of business, however they are not classified as employees and Uber has battled in court for this distinction. Recently, Khosrowshahi urged the US government to find a third classification for gig workers that would give them flexibility but also protection in the tough times to come.
The Uber board of directors agreed that Khosrowshahi would forgo his base salary for the remainder of 2020. According to CNBC, that amounted to $1m in 2019, though he “gained the vast majority of his compensation from bonuses and stock awards”.
In his memo, Khosrowshahi said: “Days like this are brutal. I am truly sorry that we are doing this, just as I know that we have to do this. And while it’s easier said than done, we have to keep our heads down and keep executing, because that – and nothing less – is what will keep Uber going and get us to the other side.”
