The gig economy is crumbling during the coronavirus pandemic. Uber announced it is laying off 3,700 employees — nearly 14% of its 26,900-strong workforce.
The company revealed the move in a filing with the Securities and Exchange Commission submitted on May 2, 2020. The majority of layoffs will affect the company‘s customer support and recruitment teams, according to the documents.
“Due to lower trip volumes in its rides segment and the [Uber’s] current hiring freeze, [Uber] is reducing its customer support and recruiting teams by approximately 3,700 full-time employee roles,” the filing reads. “In connection with these actions, [Uber] estimates that it will incur approximately $20 million related to severance and other termination benefits.”
The ride-sharing giant cites the coronavirus as the main cause, blaming “uncertainty resulting from the COVID-19 pandemic and its impact on [its] business.”
In addition to the cuts, CEO Dara Khosrowshahi has agreed to forego his salary for the remainder of the year. The Uber boss made $1 million in base salary in 2019, but bonuses and stock awards make up most of his compensation, according to CNBC.
Uber stock has dropped nearly 2.5% since the announcement.
The more concerning bit is more cuts might follow. “We are looking at many scenarios and at each and every cost, both variable and fixed, across the company,” Khosrowshahi said in a memo to employees. “We want to be smart, to move fast, to retain as many of our great people as we can, and treat everyone with dignity, support and respect.”
Uber, whose bookings have purportedly dropped by 80%, is expected to deliver a final financial update within two weeks, CNBC notes.
The announcement comes a day after fellow gig economy giant Airbnb revealed it was letting go 25% of its workforce — or nearly 1,900 people. Just like Khosrowshahi, its CEO Brian Chesky cited an immense drop in revenue due to the pandemic.
Here is the full memo Uber’s Khosrowshahi sent to employees:
I wanted to let you know that we just announced the elimination of around 3,700 roles in CommOps and Recruiting, and the closure of 40% of our Greenlight locations. You can read the emails that were sent to those teams here.
With the reality of our Rides trips volumes being down significantly, our need for CommOps as well as in-person support is down substantially. And with our hiring freeze, there simply isn’t enough work for recruiters.
This is not in any way a reflection of these employees’ efforts or contributions to getting us to where we are, as a service that everyone associates with movement and earnings opportunities. We wouldn’t be here without their efforts and I want to personally thank them for everything they’ve done for Uber.
We have worked hard to put together generous severance packages with a longer period of healthcare coverage to help provide a bridge, and we are also supporting EXTs whose roles are affected by today’s decision.
That’s today’s news. But, as I said at yesterday’s All Hands, this is one part of a broader exercise to make the difficult adjustments to our cost structure (team size and office footprint) so that it matches the reality of our business (our bookings, revenue and margins). We are looking at many scenarios and at each and every cost, both variable and fixed, across the company. We want to be smart, to move fast, to retain as many of our great people as we can, and treat everyone with dignity, support and respect. As I said yesterday, you can expect we will have a further, final update for you within the next two weeks.
Days like this are brutal. I am truly sorry that we are doing this, just as I know that we have to do this. And while it’s easier said than done, we have to keep our heads down and keep executing, because that—and nothing less—is what will keep Uber going and get us to the other side.
Given this news, and since we have Q1′20 earnings tomorrow, I thought it would be good to get everyone together again on Friday for a Global All Hands, where we can walk through our financial results and today’s changes, and can continue to answer your questions as openly as possible. Keep an eye out for an invite soon.