SINGAPORE: Ride-hailing and payments firm Grab announced on Tuesday (Jun 16) that it has retrenched about 360 employees, or 5 per cent of its headcount, to cope with the impact of the COVID-19 outbreak.
In a note to employees, CEO and co-founder Anthony Tan said that this is Grab's "last organisation-wide layoff" this year.
"Please know that we did not come to this decision lightly. We tried everything possible to avoid this but had to accept that the difficult cuts we are making today are required, because millions depend on us for a living in this new normal," said Mr Tan.
READ: Growth in food delivery business not enough to cover transport decline amid COVID-19 outbreak, says Grab Singapore head
"We are truly sorry for what’s happening today. To those who are impacted, we owe you an explanation," he said.
GRAB TO FOCUS ON CORE VERTICALS SUCH AS DELIVERIES
Over the past few months, Grab has reviewed all costs, cut back on discretionary spending and reduced the salaries for senior management, said Mr Tan.
With an expected recession ahead, he added, there was a need for Grab to prepare for a "long recovery period" and become leaner as an organisation.
Moving forward, Grab will halt certain non-core projects, consolidate functions for greater efficiency and right-size some teams.
"I assure you that this will be the last organisation-wide layoff this year and I am confident as we execute against our refreshed plans to meet our targets, we will not have to go through this painful exercise again in the foreseeable future," said Mr Tan.
Grab, which is active in eight countries, did not face capitalisation issues and will be "pivoting to focus on deliveries", a Grab spokesperson told Reuters.
Mr Tan added in his note that the company will focus efforts on adapting its core verticals such as ride-hailing, deliveries, payments and financial services "to address the challenges and opportunities of the new normal".
It also plans to expand support for small businesses by enriching its merchant service offerings, Mr Tan said.
"We believe these steps will steady us on the path towards sustainability," he said.
READ: From taxi driver to transport ambassador: How Singapore’s cabbies are navigating the COVID-19 downturn
Affected employees were informed via email by 1pm on Tuesday, said Grab.
The retrenchment package includes a severance payment of half a month for every six months of completed service.
Those who are retrenched will also receive an enhanced separation payment, worth about 1.5 months of salary, for assistance during the COVID-19 crisis and bonus for work done this year.
Retrenched employees will continue to have medical insurance coverage until the end of the year, while expectant parents will be able to encash their maternity or paternity leave.
Affected employees can also opt to keep their laptops.
A LONG WINTER
Softbank-backed Grab is Southeast Asia's most valuable startup with a valuation of US$14 billion.
Since launching in 2012, Grab has evolved from a ride-hailing app into a mobile technology firm providing transportation, logistics and financial services.
It acquired Uber's Southeast Asia's operations in 2018 in a deal described as “the largest-ever of its kind in Southeast Asia”.
In February this year, Grab announced that it had secured a combined US$856 million investment from Japanese investors Mitsubishi UFJ Financial Group (MUFG) and IT services firm TIS.
The funding would be used to offer lending, insurance and wealth management products and services for Southeast Asian consumers and small and medium-sized enterprises, Grab said then.
Grab also counts Chinese ride-hailing giant Didi Chuxing, Toyota Motor, Hyundai Motor, Microsoft as investors.
Before the COVID-19 pandemic broke, Grab's CEO said that the company could go public once its entire business was profitable.
Since the start of the outbreak, however, its revenue has taken a hit, co-founder Tan Hooi Ling told CNA last month.
With overall revenue "lower than it used to be pre-COVID", the company was preparing for a potentially "long winter", Ms Tan said then.
The company is taking measures to conserve cash and is preparing for "the worst case scenario", she added.
Grab Singapore's managing director Yee Wee Tang also told CNA earlier this month that while the company has seen an uptick in food deliveries, its core ride-hailing business has dropped.
“Unfortunately our transport business is bigger than our food business. So while our food business has increased, the drop in transport business is more significant," he added.