Yesterday (20 June), Grab Holdings announced a retrenchment of workers.
And if you think it was just like any other layoff, it wasn’t.
Grab, which has its headquarters in Singapore, revealed that 1,000 workers would be retrenched.
Based on Grab’s annual report last year, it had a total of 11,934 employees across the globe as of 31 December 2022, meaning that the company’s letting go of 11% of its manpower.
Grab, which was founded in 2012, currently operates in eight Southeast Asian countries like Singapore, Indonesia, Malaysia, the Philippines, Thailand and Vietnam.
Grab’s CEO Sent a Letter, Said Retrenchment “Not a Shortcut to Profitability”
In a letter that Grab’s Chief Executive Officer (CEO) Anthony Tan sent to employees yesterday (20 June), he explained that the cut in manpower was “not a shortcut to profitability”.
Instead, he said it was due to “the need to be fit for the future”.
“Change has never been this fast. Technology such as generative AI (artificial intelligence) is evolving at breakneck speed. The cost of capital has gone up, directly impacting the competitive landscape,” he explained.
“We must combine our scale with nimble execution and cost leadership, so that we can sustainably offer even more affordable services and deepen our penetration of the masses.”
Apart from that, Mr Tan also clarified that Grab had maintained consistency in terms of “managing costs tightly in all areas” and that the company’s bottom line has improved every quarter since the first quarter of last year (Q1 2022).
Reuters confirmed the authenticity of the letter; a user on Chinese social media application Xiaohongshu also posted a screenshot of the letter from Mr Tan.
Grab’s Shares and Revenue Looked Positive
On the other hand, it seems like Grab’s shares have been looking positive.
After Mr Tan issued his letter to staff, Grab’s shares increased by 4.7% pre-market.
Although Grab experienced a quarterly loss of US$250 million (approximately S$336 million), the revenue in Q1 2023 increased by 130.3% from last year to US$525 million (approximately S$705 million).
The quarterly loss was also an improvement as compared to the US$435 million (approximately S$584 million) loss in the first quarter of 2022.
A press release in February also revealed that the group breakeven timeline could be accelerated with the implementation of an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) basis.
This would bring the breakeven forwards from the second half of next year to Q4 2023.
Previously, Grab also told its employees that the company would start rolling out cost-saving measures for the sake of “sustainable, profitable growth”.
The measures included the freezing of senior managers’ salaries and a reduction of travel and expense budgets.
And it seems like Grab isn’t the only company that’s been laying off employees.
Last September, foodpanda retrenched 60 employees to “remain competitive”.
Other large firms, like Spotify and Meta, also laid off a substantial number of workers this year.