Uber lays off hundreds more workers as it struggles to make money

The cuts, which total about 8 per cent of Uber's global product and engineering group, follow 400 layoffs in July from the marketing team.
The cuts, which total about 8 per cent of Uber's global product and engineering group, follow 400 layoffs in July from the marketing team.PHOTO: ST FILE

SACRAMENTO (NYTIMES)- Uber laid off 435 workers in its product and engineering teams on Tuesday (Sept 10), the company's second round of cuts in recent months as it struggles to make money.

The cuts, which total about 8 per cent of Uber's global product and engineering group, follow 400 layoffs in July from the marketing team. In a message to employees about the layoffs on Tuesday that was viewed by The New York Times, Uber's chief executive, Dara Khosrowshahi, said the company had gone off course as it grew and must streamline to regain its competitive edge.

"In the past, we grew our teams rapidly and in a decentralized way. This made sense as we worked to scale the business globally and find product-market fit," Khosrowshahi wrote in the email, which echoed what he said in July with the previous layoffs. "But at a certain point, bigger teams do not mean better results. It's critical we get our edge back and continually push ourselves to do better."

Uber has been under pressure this year over its long-term viability. The company had a troubled initial public offering in May as investors questioned its ride-hailing business, which is expensive to operate. Uber's stock slid below its offering price on its first day of trading and continues to struggle. In August, it reported a record quarterly loss of US$5.2 billion (S$7.17 billion) and its slowest-ever revenue growth. Uber's shares rose about 4 per cent on Tuesday.

In response, Khosrowshahi has shaken up Uber's top ranks and tried to cut costs. After cutting jobs in the marketing team in July, he instituted a month-long hiring freeze and instructed executives to re-evaluate the size of their teams. In addition, he pushed out top executives, including his chief operating officer and chief marketing officer. Uber's board has also undergone some turnover.

"Everybody knows that Uber can't lose billions of dollars a quarter forever, but it's always been a question of when the money might run out," said Harry Campbell, a ride-hailing driver and founder of the industry website The Rideshare Guy. "We've seen Uber institute a number of cost-cutting measures at the driver and rider level and now the cuts are coming to the corporate side of the business in order to move towards profitability."

In his email, Khosrowshahi said he was not making job cuts to appease investors. "We are not doing this for Wall Street. We are doing this for Uber," he wrote.

Uber faces other labour problems. California's state Legislature is set to vote this week on a bill that would force Uber to reclassify its drivers as employees rather than as independent contractors. Uber relies on independent contractors as drivers, as their freelance status helps keep costs down by allowing the company to not provide full-time benefits or pay. Uber and other gig economy companies worked for months to cut a deal with labour groups to carve out ride-hailing drivers from the bill, but those negotiations failed. The bill is widely expected to pass.

Uber employs more than 27,000 people globally, nearly half in the United States, a company spokesman said. The new layoffs were earlier reported by TechCrunch.