SINGAPORE: Grab’s decision to slash more than 1,000 jobs stems from the need to address a “bloated” headcount and remain nimble for challenges ahead, analysts told CNA.
The Nasdaq-listed technology firm said on Tuesday (Jun 20) it would be shedding 11 per cent of its workforce, its biggest round of job cuts since the pandemic.
The retrenchments came as Grab is fighting to turn a profit and win back investors. It is targeting to hit adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) breakeven in the fourth quarter of this year.
In a letter sent to employees, chief executive Anthony Tan said the cuts were a strategic reorganisation to adapt to the operating environment, and not “a shortcut to profitability”.
Analysts agreed, noting that the company is “firmly” on the path to profitability, especially as demand for ride-hailing continues to recover across the region.
That said, challenges lie ahead in the form of still-rising interest rates, a souring economic environment and the rise of artificial intelligence, they added.
“Corporate restructuring, cost-cutting and layoffs happen once every few years for large, established companies. For tech companies, it happens on an even shorter cycle,” said Ms Vion Yau, insights lead at venture builder Momentum Works.
“Essentially they serve similar objectives – to make organisations leaner, more efficient and more adaptable to the changing market.”
In Grab’s case, the latest job cuts are unlikely to be due to investor pressure for profitability given how the firm has “a very healthy” net cash liquidity of US$5 billion at the end of the first quarter, Ms Yau told CNA.
Rather, the firm is mulling over the route to take after turning a profit.
“I actually think that Grab is confident about its breakeven target but as the fourth quarter approaches, they will need to think about what happens afterwards,” said Ms Yau.
“There is a long journey ahead after breakeven.”
