Second Round of Downsizing at Uber


Uber decides to cut costs by laying off about 3,000 employees and closing down many offices to overcome the crisis caused in this time of the pandemic.

The CEO of the company, Dara Khosrowshahi confirmed that the company would lay off more employees, which will bring to a total of 6,700 employees laid off, out of its remaining 28,600 workforce globally.

Khosrowshanhi emailed his staff mentioning that they cannot meet the finances through Uber eat only, which was significantly doing well as people in lockdown were placing orders through Uber eat. Uber’s ride demand is down by 80% whereas Uber eats has flourished since the COVID-19.

He stated in the email, “We had to take the time to make the right decisions, to ensure that we are treating our people well, and to make certain that we could walk you through our decision making in the sort of detailed and transparent manner you deserve”.

The CEO said in a statement that as it is not sure when the business will recover from the adverse impression of the pandemic, we are focusing to get Uber Eats to get more profitable in the same way we did for our rides, but this will take time. The profit we are getting from our food delivery platform is not substantial enough to meet our expenses.

He also stated that this situation has made the company take some difficult decisions and the company will lay off further 3000 employees, and thanked the employees for their contribution towards the firm. The company is focusing not to rely on investors instead of cope up with its own self.

This downsizing will save a total of $1 billion for Uber. But Uber will have to pay severance and other benefits to employees, which will cost around $145 million and around $80 million will cost to shut down offices.

The contractual drivers are not part of this downsizing. Many drivers are asking the company for better protection and benefits and some drivers held a protest against Uber to keep drivers classified as independent contractors.

Uber has been in hot water financially for the last few years, the company had picked up to retain a stable financial position. But unfortunately the COVID-19 crisis has destroyed much of the company’s road to stability and it has faced yet another financial crisis.

The severity of the crisis to continue is not known at the moment. As the company is unable to foresee a stable situation in the near future.

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