Grab – one of the highest-valued startups in Southeast Asia – has just announced its plan to discharge 360 staff members, equalling 5 per cent of the company's total personnel to cope with the economic impact of the global health crisis.
|Grab's plan to discharge several hundred employees is meant to deal with the impact that the pandemic has caused |
According to CEO Anthony Tan, the coronavirus outbreak has caused such great damage to the company's performance, that Grab has been carrying out these adjustments to deal with the consequences.
In addition to diminishing its personnel, the Singapore-based firm also intends to eliminate some unnecessary projects, aiming to restructure the staff members for its delivery business.
“Over the past few months, we reviewed all costs, cut back on discretionary spending, and implemented pay cuts for senior management. Despite all this, we recognise that we still have to become leaner as an organisation to tackle the challenges of the post-pandemic economy,” Tan noted in an announcement.
During the pandemic's peak in April, Tan said that COVID-19 is the biggest catastrophe Grab has ever seen in its eight years of operation. At the time, Tan warned about possible future decisions related to financial restructuring and capital management of the company.
In the announcement, Tan said that the axed staff members received the related news via email. Moreover, information regarding insurance and severance packages are specified in the emails.
“I assure you that this will be the last organisation-wide layoff this year and I am confident, as we execute against our refreshed plans to meet our targets, we will not have to go through this painful exercise again in the foreseeable future,” said Tan.
Grab's decision to cut personnel is hurting one of its investors, SoftBank, who is also in trouble with the inefficient $3-billion investment in WeWork as well as billions of US dollars it poured into Uber and Didi Chuxing.
Last March, Grab received a $1.46 billion investment from SoftBank's Vision Fund. The added amount raised its total capital mobilisation to more than $4.5 billion. Grab’s other investors include Toyota Motor Corporation, Oppenheimer Funds, Hyundai Motor Group, Booking Holdings, Microsoft Corporation, Ping An Capital, and Yamaha Motor.
With the huge investment, SoftBank assessed Grab at a high value and had big expectations for the future. However, the pandemic landed and swept away its hopes as Grab has been struggling to recover from the health crisis.
SoftBank recently reported losses of $12.7 billion in the latest fiscal year. Meanwhile, Uber and WeWork are the biggest names causing financial damage to the Japanese investor.