Uber is closing 45 offices and cutting a further 3,000 jobs

19 May 2020331 Views

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The Uber app displayed on a smartphone. Image: Pe3check/Depositphotos

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In less than a month, Uber has laid off roughly one-quarter of its global workforce as it attempts to cut costs during the Covid-19 crisis.

On Monday (18 May), Uber CEO Dara Khosrowshahi informed employees that the company would be taking further measures to dramatically reduce costs, just a fortnight after the business announced that 3,700 jobs were to be cut.

In an email to staff, Khosrowshahi said that cutting costs by $1bn in 2020 would help the business to stay on track amid Covid-19 challenges. He added that this includes closing 45 offices and laying off another 3,000 full-time employees.

This means that in less than a month, Uber has announced plans to lay off around a quarter of its global workforce.

“Ultimately, I realised that hoping the world would return to normal within any predictable timeframe, so we could pick up where we left off on our path to profitability, was not a viable option,” Khosrowshahi said.

Cutting costs

Prior to the coronavirus pandemic, Uber made the majority of its revenue through its ride-hailing services. In its latest earnings report, Uber said that ride-hailing suffered a 3pc decline in the first quarter of the year, and that trip requests had dropped 80pc globally in April.

While Uber Eats saw bookings increase by 54pc year over year, as consumers turned to takeaways during the crisis, Khosrowshahi said that this strand of the business “doesn’t come close” to covering Uber’s expenses.

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“I have every belief that the moves we are making will get Eats to profitability, just as we did with Rides, but it’s not going to happen overnight.”

The company lost a total of $2.9bn in the first fiscal quarter of 2020.

‘We are making really hard choices’

To reduce the impact that the pandemic has had on its business, Uber plans to reshuffle some of its divisions, as well as shutting offices and laying off staff. Khosrowshahi said that the company plans to refocus its efforts on the core business, which is “helping people move and delivering things”.

Uber will also be winding down its tech incubator and its AI Labs division, and will “pursue strategic alternatives for Uber Works”, which is the company’s app for finding shift work. However, Uber still plans to invest in autonomous vehicles, with Khosrowshahi saying that this part of the business “has always been a long-term investment”.

In the email to staff, the CEO said: “Having learned my own personal lesson about the unpredictability of the world from the punch-in-the-gut called Covid-19, I will not make any claims with absolute certainty regarding our future.

“I will tell you, however, that we are making really, really hard choices now, so that we can say our goodbyes, have as much clarity as we can, move forward and start to build again with confidence.”

The Uber app displayed on a smartphone. Image: Pe3check/Depositphotos

Kelly Earley is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com