Grab cuts over 1,000 staff in biggest layoff since pandemic; CEO cites ‘fundamental step-changes’ in operations

GRAB is retrenching over 1,000 employees, or 11 per cent of its workforce, as it grapples with an increasingly challenging operating landscape amid the downturn.

In a letter sent late on Tuesday (Jun 20) night and seen by The Business Times, Grab chief executive Anthony Tan cited a business re-organisation and the need to optimise efficiency as reasons for the cuts.

“We believe fundamental step-changes in our operating model and cost structure are needed to build our competitive moat for the longer term. The primary goal of this exercise is to strategically re-organise ourselves, so that we can move faster, work smarter, and rebalance our portfolio in line with our longer term strategies,” said Tan.

The round of layoffs – the group’s largest since the pandemic – comes as Grab is under pressure to turn profitable soon. It is targeting to hit adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) breakeven this year.

In his e-mail, Tan said that the retrenchment was not “a shortcut to profitability”. The group is on track to hit its breakeven target regardless of the exercise, he added.

But he cited the need to adapt to the operating environment.

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“Change has never been this fast. Technology like generative AI (artificial intelligence) is evolving at breakneck speed. The cost of capital has gone up, directly impacting the competitive landscape,” Tan wrote.

Grab is offering severance payment of half a month for every six months of completed service, or based on local statutory guidelines, whichever is higher, the e-mail said.

Grab is the latest of South-east Asia’s large Internet companies to retrench staff as the economy turned increasingly sour. The group held off even as its peers GoTo and Sea cut staff in the thousands, and instead chose to freeze hiring and salaries while slashing travel and expense budgets.

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Shares of Grab have tumbled about 70 per cent since its New York stock market debut in December 2021, despite cost-cutting efforts and the promise of profitability.

Last month, the group said adjusted Ebitda improved by 77 per cent for the first quarter ended March, coming in at a loss of US$66 million, from a loss of US$287 million a year ago.