The company insists there’s no capital problem, just a goal to make things leaner.
Grab’s CEO Anthony Tan has announced the company will be letting go off around 5% of employees, a total 360 people.
The company will not be shutting down offices, and that this is the last company wide layoff the company will perform this year. Grab employees who are laid off will receive severance pay, as well as an enhanced separation payment
“We conducted the layoffs to become a leaner and more efficient organization and we did this by sunsetting non-core projects, consolidating teams and pivoting to focus on deliveries,” said a Grab spokesperson to tech publication Techcrunch.
Grab is the largest ride-hailing platform in Southeast Asia, and like its competitors and fellow consumer facing companies like Uber, Airbnb and others, the platform was hit hard during the pandemic. Some of you may think, but wait, didn’t everybody stay in to order food delivery via Grab Food?
First of all, despite the surge in volume for food delivery, the unit economics aren’t enough to cover the existing costs of keeping the company running. What else? With the main service of rides essentially wiped out during quarantine, the core business took a significant hit.
New Realities, New Demands:
The demand for Grab rides will resume back to its normal levels soon enough. It could also provide as another (albeit pricier) alternative for commuters who wish to avoid public transportation during these times.
It makes sense for Grab to keep operations lean and cater more towards its payments functions and deliveries as engagement surged during this “new normal economy”. It is also reallocating more resources to its on-demand delivery verticals.
“Since February, we have seen the stark impact of COVID-19 on businesses globally, ours included. At the same time, it has become clear that the pandemic will likely result in a prolonged recession and we have to prepare for what may be a long recovery period, ” wrote CEO Anthony Tan.
Grab will cut some “non-core projects,” consolidate functions and reduce team sizes.
In unrelated news, Grab Thailand’s Country Head Tarin Thaniyavarn will be leaving the company after over two years in the role. He announced his resignation publicly in May.