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May 6, 2020 10:30 AM, EDT

Uber to Reduce Workforce by 14%, Signals Further Cuts

Uber said it would cut its workforce by 14% due to the coronavirus.Uber said it would cut its workforce by 14% due to the coronavirus. (Victor J. Blue/Bloomberg News)

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Uber Technologies Inc. will eliminate 3,700 jobs and permanently close 180 driver service centers, the first in a series of cost-cutting measures to be announced in the next two weeks as a response to the coronavirus pandemic.

The reductions will affect 14% of staff worldwide, mainly those in support and recruiting, CEO Dara Khosrowshahi wrote in an email to employees May 6. Ridership is down significantly, and the company is maintaining a freeze on hiring, Khosrowshahi wrote in the email, which was reviewed by Bloomberg.

Of Uber’s more than 450 global driver centers, 40% will shut down. The locations, called Greenlight Hubs, are used to sign people up to drive for Uber, teach them how to use the app and address issues that arise on the job. In March, as the virus was spreading in North America, Uber said it was temporarily closing all hubs in the United States and Canada.

Khosrowshahi signaled that more “difficult adjustments” would be put forth in the next two weeks.

“Days like this are brutal,” he wrote.

This sort of painful day is becoming commonplace. Tech companies have eliminated more than 38,000 jobs in the past two months, according to Layoffs.fyi, which tracks the job market. Lyft Inc., the main alternative to Uber in North America, said last week it was dismissing 17% of staff, furloughing more and reducing salaries. Their longtime peer in the sharing economy, Airbnb Inc., said May 5 the company was cutting a quarter of its workforce.

The job losses are sudden for many, but at Uber, they may seem drawn out. After a disappointing initial public offering a year ago, Uber dismissed more than 1,000 employees over multiple rounds of cuts that extended from July to what Khosrowshahi described as a “last wave” in October. They were part of a drive toward profitability, which was expected to arrive by the end of this year.

Uber has seen its landscape shift considerably since then. It instituted a hiring freeze in March, withdrew its financial forecast and wrote down some $2 billion worth of investments in April. On May 4, the company said it would shutter food delivery operations in seven countries.

As of May 2, Khosrowshahi waived his salary for the rest of the year, the company said. In 2019, he was eligible for a salary of $1 million and a bonus of $2 million, according to a securities filing. Uber is scheduled to report first-quarter financial results May 7.

The challenges posed by the virus could be matched by a new one this week from Uber’s home state. California sued Uber and Lyft on May 5 for allegedly flouting a state law designed to give gig-economy workers the benefits of employees. If the case is successful, the companies could be on the hook for substantial new costs that further jeopardize their business models.

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