After implementing a round of layoffs throughout its offices earlier this month, ride-hailing giant Uber Technologies has announced that it will be cutting additional jobs to further decrease its overhead costs. The company confirmed on Monday that more than 3,000 jobs may be affected by its latest round of layoffs.
Uber CEO Dara Khosrowshahi mentioned in an internal email to employees that the company will be shutting or consolidating up to 45 of its offices globally. The executive added that due to the continued economic disruptions caused by the coronavirus pandemic, the company is considering the possible shutdown of some of its other business units, including its freight services business.
Khosrowshahi assured employees in the email that the company's balance sheets are staying strong and its Uber Eats business is doing better than expected. He added that the company's Rides business is also steadily recovering and it might very well be able to thrive past the pandemic. Unfortunately, Khosrowshahi noted that the company's initial strategy was derailed by the unpredictable timeframe of when the economy would normalize, hence its decision to implement further cost-cutting measures.
During the first week of May, Uber had decided to cut 3,700 jobs, which accounted for about 14 percent of its entire workforce. Taking into account its latest round of job cuts, the company would be left with only around 20,000 employees. Khosrowshahi assured those that would be affected that the company has worked to provide ample severance benefits and support to those it would have to let go. Uber will be providing limited continued healthcare coverage for affected employees as well as giving them access to the company's alumni talent directory.
In its filing with the Securities and Exchange Commission (SEC), Uber estimated that it may be incurring a charge of about $220 million related to the job cuts, most of which will be placed on its second-quarter earnings report. Around $110 million to $140 million will be directly linked to severance packages for affected employees. Another $65 million to $80 million will be spent on expenses related to office closures, including an estimated $25 million for leasehold improvement write-offs.
The company had previously stated that it had tightened its budget and spending wherever possible to avoid losing more employees. The company's board of directors has even agreed to forego all of their retainers for the rest of the year in order to save money. Uber assured stakeholders that the latest job cuts, office closures, and consolidations should have no long-term impairments on its key business functions.
