Ride-hailing giant Uber is tightening its belt as the coronavirus pandemic continues to disrupt its business worldwide. The company stated on Wednesday that it plans to cut up to 3,700 jobs, or roughly 14 percent of its global workforce, in order to save on cost.
In a regulatory filing, Uber explained that a dip in its global trip volumes has forced it to supplement its current hiring freeze by reducing its workforce. The majority of jobs that will be affected by the measure will be those on the company's customer support and recruitment departments.
On Tuesday, Uber CEO Dara Khosrowshahi had mentioned during an internal meeting that the layoffs would be implemented within two weeks. Apart from the job cuts, the executive also stated that he and other top management will be forgoing all or part of their salaries until the end of the year. Khosrowshahi offered to forego his entire $1 million annual base salary to help alleviate financial pressure.
While the job cuts will eventually save the company millions of dollars in the long-term, Uber stated that it will likely be spending around $20 million in implementing the measure. Most of the money will be spent on paying severance and other benefits to affected employees.
Following its announcement of the job cuts, Uber's stock prices fell by as much as 2.5 percent in early trading on Wednesday. Since its highs in February, the company's stock has fallen by over 32 percent.
At the end of 2019, Uber reported that it had around 26,900 workers worldwide, with around 10,700 of the total working the US. Since the start of the pandemic earlier in the year, Uber and other ride-hailing firms experienced dramatic drops in revenues as people were being ordered to stay at home to mitigate the spread of the disease.
Since then, Uber has been leaning heavily on its Uber Eats delivery business to offset its losses. Khosrowshahi acknowledged the fact during an analyst meeting in April. He mentioned that Uber Eats has become a vital segment in its overall business given the circumstances. He added that the business is helping local businesses continue their operations amid the restrictions.
Uber is scheduled to release its first-quarter financial performance on Thursday this week. Khosrowshahi will also be providing additional details regarding the pandemic's effects on Uber's operations and its business moving forward.
Uber's ride-hailing rival Lyft, which operates only in the US, also announced that it would be laying off around 1,000 of its employees, or roughly 17 percent of its workforce.
