20-6-2023 (SINGAPORE) Grab Holdings, the prominent ride-hailing and food delivery app in Southeast Asia, is set to reduce its workforce by 1,000 employees, which accounts for approximately 11% of its total staff. CEO Anthony Tan cited the need to control costs and ensure the long-term affordability of services as the primary reasons behind this decision, according to a letter sent to employees and seen by Reuters.
Tan emphasized that the job cuts were not merely an attempt to achieve immediate profitability but rather a strategic restructuring to adapt to the evolving business landscape. He acknowledged the rapid pace of technological advancements, such as generative artificial intelligence, along with the increased cost of capital, which directly impacts the competitive environment.
“To sustainably offer even more affordable services and expand our reach, we must leverage our scale, execute with agility, and prioritize cost efficiency,” stated Tan in the letter.
Tan reassured employees that Grab had already implemented cost-saving measures and expressed confidence in achieving its target for group adjusted EBITDA breakeven this year, even without the layoffs.
Founded in 2012, Grab operates as a “superapp” and provides delivery, ride-hailing, and financial services across eight Southeast Asian countries, including Singapore, Malaysia, Indonesia, Thailand, Vietnam, and the Philippines.
The company plans to support affected employees through various measures outlined in the letter. These include severance payments based on the duration of completed service, a goodwill payment to compensate for missed target bonuses and equity, and access to career transition and development support, including a one-year free subscription to LinkedIn Premium and LinkedIn learning, as well as sessions with professional coaches.
Tan emphasized that the primary objective of the job cuts is to strategically reorganize the company, enabling it to operate more efficiently and optimize resources across its portfolio. He acknowledged the difficulty of this decision but deemed it necessary to align Grab with its long-term vision.
Following Tan’s announcement to staff, Grab’s premarket shares surged by 4.7%. The stock had already experienced a boost, rising as much as 5.6% premarket due to earlier reports of the anticipated job cuts by Bloomberg News.
This move by Grab comes in the wake of similar cost-cutting initiatives in the tech sector. Indonesian firm GoTo, offering ride-hailing, e-commerce, and financial services, implemented layoffs in 2022, reducing its workforce by 12%. In March, an additional 600 staff members were let go. Meanwhile, Grab’s co-founder, Tan Hooi Ling, announced her departure from operational roles by the end of this year.
Despite reporting a quarterly loss of US$250 million in May, Grab noted a significant increase in revenue for the first quarter of 2023, amounting to US$525 million, a growth of 130.3% compared to the previous year.
It’s worth mentioning that Grab’s last round of job cuts occurred in 2020, when the company laid off 360 employees in response to the pandemic’s impact. As of the end of 2022, Grab had a workforce of 11,934, including approximately 2,000 individuals from its acquisition of a grocery chain.
Last year, Grab announced no plans for mass layoffs, despite market challenges. However, the company implemented cost-saving measures, including freezing hiring, pay raises for senior managers, and reducing travel and expense budgets.
