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business
Tuesday May 05 2020
By
Reuters
,
Web Desk

Uber’s Careem to lay off 31% of workforce over 'severe' hit from coronavirus

By
Reuters
,
Web Desk
A Careem employee shows the ride-hailing company's logo on their mobile in its office in Ramallah, Palestine, July 17, 2017. REUTERS/Mohamad Torokman/Files

DUBAI: Careem, a subsidiary of Uber Technologies, has announced to cut 31% workforce and suspend its mass transportation business due to the crisis arising out of coronavirus pandemic.

The announcement came hours after Uber said it was shuttering its Eats delivery business in several markets — including the Middle East — and laying off dozens of staff.

According to a statement shared with Geo.tv, Careem experienced a "severe" hit from the coronavirus pandemic, which forced it "to change the shape and size of our organisation" for long-term survival.

Terming the mass layoff "a last resort", the ride-hailing app noted that those who were let go were "people that helped build Careem and create massive change and impact for our communities across the region".

"We greatly value their work and dedication and sincerely hope we will be able to hire those people back once we build a sustainable basis for our future,” the statement added.

A spokesperson for Careem Pakistan added: "As we envisioned becoming a Super App, reshaping for some of our markets was already under process, it has been further impacted by the current crisis."

Careem, which operates ride-hailing and delivery businesses primarily in the Middle East and South Asia, said it was prioritising the security of the company and that parent Uber continued to believe in its business model and was committed to the region.

"As we have discussed several times in the last few weeks, the crisis brought on by COVID-19 has put our dream and future impact at significant risk," Chief Executive Mudassir Sheikha said in a blog on Careem's website.

Sheikha, who founded the company in 2012, said the business was down over 80% and that it was "alarmingly unknown" when it would recover.

"In this new reality, the surest way to secure Careem for the long term is to drive towards self-sustainability within a reasonable time frame," he said.

Also read: Uber announces to buy rival Careem for $3.1 billion

Careem did not say how much it expected to save from the layoffs or which business units staff had been cut from. However, it said tech-colleagues were protected in relative terms so it could continue to invest in its products.

Affected employees would receive at least three months severance pay, a month of equity vesting and in some cases extended visa and medical insurance, including for family members, until the end of the year.

The Careem BUS mass-transportation operation has also been suspended, it said. The company has also found "significant savings" from pausing new benefits, it said without disclosing details.

Uber earlier announced it was closing its food delivery business in Saudi Arabia, Egypt and other countries, while its United Arab Emirates (UAE) operations would move to Careem.

Global ride-hailing app, Uber, had bought Careem in 2019 for $3.1 billion.