SINGAPORE — Southeast Asia’s most valuable startup Grab will slash 5% of its global staff amid a collapse in demand for its core ride-hailing business triggered by the coronavirus pandemic and as recovery prospects remain uncertain.
The first round of layoffs in eight year history, the Singapore-based startup said Tuesday that it will be letting go 360 people out of 7,000 staff globally.
Grab has operations in eight Southeast Asian countries, and has research and development centers outside the region including India, China and the U.S. The company has not disclosed which departments or countries are affected.
“We tried everything possible to avoid this but had to accept that the difficult cuts we are making today are required,” said Grab CEO and co-founder Anthony Tan in a note to employees. “We are truly sorry for what’s happening today.”
The staff cuts at Grab are the latest blow for a SoftBank portfolio company, after misfires at other companies in which it is a major stakeholder such as India’s Oyo Hotels and Homes. SoftBank reported a 1.43 trillion yen ($13.3 billion) net quarterly loss for the January-March quarter last month.
Grab’s core ride-hailing business has been severely affected by lockdown measures implemented across Southeast Asia to slow the spread of the coronavirus.
While some businesses such as food delivery saw a surge in demand surge due to the lockdown measures, total revenues remained much lower compared to before the onset of the pandemic.
Grab had already offered voluntary unpaid leave and reduced working hours for employees in departments that had excess capacities, while senior management also took pay cuts of up to 20%.
“We recognize that we still have to become leaner as an organization in order to tackle the challenges of the post-pandemic economy,” said Tan.
Founded in 2012, Grab grew rapidly in tandem with the region’s economic growth and smartphone penetration, attracting global investors including SoftBank, Toyota Motor and Microsoft.
On the back of such investors, Grab has rolled out multiple new digital-based businesses and captured market shares in the region, describing itself as a “super app”.
It was last valued at $14.3 billion, according to CB Insights, making it the most valuable startup in Southeast Asia. The company has been at the center of the region’s growing startup scene along with its Indonesian rival Gojek, which was last valued at $10 billion.
The COVID-19 pandemic has affected such fast-growing startups globally.
American ride-hailing giants Uber Technologies and Lyft and home-sharing platform Airbnb have already announced major layoffs. In Southeast Asia, Indonesian online travel agent traveloka has cut off about 10% of staff.
Grab stressed that it will remain focused on its existing main businesses including transport, deliveries, mobile payments and financial services, but it may need to adjust its strategies to survive the pandemic and the post-pandemic times.
“This will be the last organization-wide layoff this year,” said CEO Tan in the note. “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.”