Making sense of Grab’s surprising U-turn from ‘no layoffs’ stance

The news that Grab was slashing 1,000 jobs – 11% of its total workforce – came like a bolt from the blue.

While the company did not provide details on which markets or departments were affected, Tech in Asia understands that the layoff was not specific to a country.

A review of various Linkedin posts by employees who were laid off indicates that they were from departments including engineering, marketing, and HR.

One of the affected functions was user research, according to an employee who spoke to Tech in Asia on the condition of anonymity. Staff members in the department are mostly located in Singapore and the US.

The source, who was not retrenched, lamented that “some really good people got impacted” and described the general mood among employees as “upset.”

They have good reason to be. Even as other Southeast Asian tech firms like Sea Group and GoTo Group underwent several rounds of job cuts starting last year, Grab COO Alex Hungate said in September 2022 that the super app didn’t “see [itself] in that category” of companies embarking on mass layoffs.

He added that the firm had been “very careful and judicious” about recruitment and had not gotten to a “desperate” point of needing to freeze hiring or decrease its headcount as a result.

Alex Hungate / Photo credit: Linkedin

However, Grab did shed about 5% of its workforce at the start of the Covid-19 pandemic.

The firm’s no-layoffs stance was reiterated by Anthony Tan, Grab’s CEO and co-founder, in a memo to staff last December. However, he intimated that it was halting recruitment for non-critical roles and implementing a salary freeze for senior managers to avoid “knee-jerk reactions” down the road.

As such, Grab’s seeming about-face is bound to ruffle feathers. Why did it reverse course?

Layoffs not “a shortcut to profitability”

Tan was quick to refute any suggestion that the move was motivated by the need to hit earnings guidance.

In a note to employees, he stressed that the measure was not “a shortcut to profitability.” He also emphasized that with or without the job cuts, the company is on track to reach group adjusted EBITDA breakeven this year.

It’s true that Grab’s group adjusted EBITDA has been trending in the right direction, with five consecutive quarters of improvement.

Official reasons raise questions

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