The CEO of Singapore-based Grab Holdings, the top ride-hailing and food delivery app in Southeast Asia, announced on Tuesday that 1,000 jobs, or 11% of its employees, would be eliminated, refering to the need to control expenses and provide longer-term services that are more reasonably priced.
As the greatest layoffs since the start of the pandemic, according to chief executive Anthony Tan, it was not a shortcut to profitability but rather a strategic reorganization to react to the business environment. This was stated in a letter to employees that was delivered late on Tuesday.
Tan also said in the letter that change has never come at this pace. Generative AI is one area of technology that is developing extremely quickly and the competitive environment has been negatively impacted by the rise in capital costs.
To sustainably provide even more accessible goods and services and widen their market penetration, they must combine their scale with agile execution and cost leadership.
Tan claimed that even in there being no layoffs, Grab had controlled costs and should achieve its target of group adjusted EBITDA breakeven this year.
In eight Southeast Asian nations, which includes Malaysia, Indonesia, the Philippines, Thailand, Singapore, and Vietnam, the "superapp" was launched in 2012. It provides delivery, financial and rides services.
After Tan's statement to the workers, its premarket share price increased by 4.7%. In premarket trading, the stock increased as much as 5.6%, building on earlier gains following a Bloomberg News article about the layoffs.
GoTo, an Indonesian internet company that provides financial, e-commerce, and transportation services, made a comparable move last year that was followed by the layoffs. In 2022, 12% of its personnel will be eliminated as part of severe cost-cutting measures. In March, 600 more employees were let go.
According to insiders, the company's new CEO only intends to lead the company for a short time before leaving after increasing profitability.
The first quarter of this year saw revenue increase by 130.3% to $525 million over the same period last year, according to a report released in May by Grab.
The company accelerated its timeframe for profitability in February and provided a positive sales outlook for the entire 2023 fiscal year.
The last layoffs at the US-listed Grab occurred in 2020, when 360 workers were let go in reaction to the pandemic's effects. According to the company's most recent annual report, by the end of 2022, it employed 11,934 people, including around 2,000 as a result of the acquisition of a grocery chain the previous year.
It stated in September of last year that despite the challenging market, it had no plans to implement mass layoffs. Tan informed the workers in December that the company was halting most recruiting and payrises of senior managers, and reducing the travel and expense budgets.