Uber is planning to cut approximately 3,300 jobs (10 percent of global employees) in a vast restructuring that CEO, Dara Khosrowshahi, says will allow Uber to become a lot more streamlined, efficient and ready to begin the next phase of growth. The decision, communicated via an internal email on Wednesday comes at a time when this hailing service is already doing well but keen on shouldering its own growth.
Khosrowshahi came out and told employees that in the last five years, the company grew “A lot, ” and this rapid growth caused layers of management, overlapping teams, and unending coordination that drag on decisions and weaken ownership. Things that hadn’t needed fixing when the business was modest are no longer working today, as the business now has nearly tripled in size, and dozens of million of customers.
The plan: eliminate much of the bureaucracy so everyone has more time to build, ship and serve riders, drivers and merchants. The reorganization is not merely a 10-20% reduction in headcount. Compared to early 2020, there will be a reduction in management levels (x20%), some of those formerly on management tracks will be demoted and will become individual contributors.
Small-team units (1-2 persons) will have a reduction of almost half. Employees seven or more layers below CEO will reduce by 20%. Delivery operations, previously conducted within individual restaurants, retail and other verticals, will be combined under single-thread ownership. Engineering, science and delivery groups are being integrated. Remote work is also constricting. Fully remote positions will be less than 1 percent of the workforce, while those who remain in jobs will be required to work from hub citiesincluding New York and San Franciscobased on the existing hybrid policy of three office days a week.
The company is focusing talent where it thinks collaboration and speed are most important. These under the moves liberate resources that Uber plans to reinvest heavily into. The firm has already invested more than $10bn to fund its robotaxi operation and is planning to deploy its autonomous services in at least 15 cities this year.
Uber is facing increased competition from Waymo, Tesla and other firms who are racing to develop self-driving cars. Meanwhile, competition and producer power in food delivery are rising in the home country (US), as DoorDash leapfrogs Uber. But, says Khosrowshahi, Uber’s economies of scale, brand and financial strength equip it to win, if it can switch with more focus and less internal conflict.
It’s tough on thousands of individuals. The details may be national and up-front, but the impact hits home. Numerous staff will be on a support scheme, but the human toll of colossal repositioning can never be. Former colleagues who worked on a product, kept the wheels turning or, supported the drivers are now searching for alternative ways to work as the business continues business. Khosrowshahi did not shy away from Truth is, Shares in Uber jumped after the news, indicating investors like the discipline. The company is on course to finish the process with less than 30,000 staff, a number only slightly higher than its headcount in 2021 despite the enormous growth of its operations in the interim.
