Grab cuts 11% of workforce as it 'adapts to the environment' in which it operates

Ride hailing and food delivery app Grab will be cutting 11% of its workforce or about 1,000 jobs as it looks to manage costs and ensure more affordable services long-term, according to a letter that was sent to employees late on Tuesday night and that was posted publicly on the company's website.

"I have difficult news to share today. We are letting over 1,000 Grabbers go," said Grab's group CEO, Anthony Tan. "We are informing you after office hours for as many of our locations as possible, so you have the space and time to process the news privately."

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In the letter, Tan, said that the cuts were not a "shortcut to profitability" but rather, that it has been consistent in managing costs tightly in all areas of its operations and on improving platform efficiency.

"As a result, our bottom line has improved every quarter since Q1 2022. With or without this exercise, we’re on track to hit Group Adjusted EBITDA breakeven this year," he said.

However, he noted that its profitability milestone is only a step in a longer journey and that its focus is on what comes after. 

"We must adapt to the environment in which we operate. Change has never been this fast. Technology such as generative AI is evolving at breakneck speed. The cost of capital has gone up, directly impacting the competitive landscape," he said. 

"Today, thanks to each of you, we have grown to a sizable scale and are well-positioned to seize substantial new growth opportunities. To most effectively leverage these opportunities, 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, and also serve our driver- and merchant-partners better."

Tan explained that this was why it streamlined some focus areas in the past year and that now, it believes fundamental step-changes in its operating model and cost structure are needed to build its competitive moat for the longer-term.

"The primary goal of this exercise is to strategically reorganise ourselves, so that we can move faster, work smarter, and rebalance our resources across our portfolio in line with our longer term strategies," he said. 

Grab employees who were let go will be given financial, professional and medical support that includes severance payments of half a month for every six months of completed service, or based on local statutory guidelines, whichever is higher, as well as goodwill payments, extended medical insurance coverage to the end of the year, annual leave and maternity or paternity leave encashment and career transition support in addition to other benefits. 

Tan said:

While I know this is what we must do, that knowledge hasn’t removed the sadness from having to do it.

"To those who are leaving, we thank you so much for sharing your time and talent with us, and for all the impact you’ve made towards our mission. We will always be grateful for your contributions, and cherish the memories we’ve forged together as teammates," he concluded. 

The news comes hours after Bloomberg first reported that Grab was preparing for its biggest round of layoffs since the pandemic. At that point, media reports suggested that the number of layoffs will likely surpass its 2020 layoffs which saw staff numbers shrink by 5% or about 360 employees.

Grab is currently facing stiff competition from competitors just as Indonesia’s GoTo Group and its shares have slumped approximately 70% since it made its stock-market debut in New York in late 2021. This is despite its recent attempts to capture the rebound in mobility demand, optimise its costs, reduce its cost-to-serve and innovating products and services that drive stickiness and engagement within its ecosystem, according to Anthony Tan, group chief executive officer and co-founder of Grab who was commenting on Grab's Q4 2022 earnings in February this year.

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