KARACHI: After Uber Technologies on Wednesday announced that it will cut around 3,700 full-time jobs, company's Pakistan chapter said that it would also take steps which would help bring their costs in line with the size of the business today.
Uber has been under investor pressure to show profits but the coronavirus-led lockdowns have forced it to cut costs and withdraw their full-year financial outlooks as demand for app-based rides have dropped sharply across the world including Pakistan.
A slowdown in rides also hurts the income of drivers, who are hired as contractors by the companies, with Uber alone having 3.9 million of them on its platform.
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"With people taking fewer trips, the unfortunate reality is that there isn’t enough work for many of our front-line customer support employees. Since we don’t know how long a recovery will take, we are taking steps to bring our costs in line with the size of our business today. This was a tough decision, but it is the right one to help protect the company’s long-term health and ensure we come out of this crisis stronger," Hyder Bilgrami, head of communications Uber Pakistan, said in a statement.
He did not specify the steps. However, a statement from Uber hints at the fate of its employees in Pakistan.
According to the statement, the layoffs, affecting 17% of its employee count, included its customer support and recruiting teams, and expects to incur about $20 million in costs for severance and related charges.
Uber's Chief Executive Officer Dara Khosrowshahi would also forgo his base salary for the remainder of the year.
“On the ride-sharing front, Uber and Lyft face Herculean-like challenges ahead as the new reality will likely change the business models of these companies (and competitors) for the foreseeable future,” Wedbush Securities analyst Daniel Ives said.
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Lyft, a rival of Uber, last week laid off 982 employees, or 17% of its workforce, and cut base salaries of top executives in addition to furloughing hundreds of employees.
Ives also said the pandemic may change consumer behaviour as work-from-home becomes more common and people grow wary of using cab services due to concerns around the health of previous passengers.
On Wednesday, Uber also launched a new Eats feature that allows customers to order food across countries, with real-time delivery tracking.
Analysts expect robust growth at Uber Eats to modestly offset declines in its Rides business when it reports earnings on Thursday.
(With input from Reuters)