Gojek said to have laid off more employees in profitability chase amid virus pressure

Photo: GoJek

Indonesian ride-hailing major Gojek is understood to have undertaken another wave of layoffs affecting over 100 of its employees across the mid to lower level as it continues to focus on efficiency and profitability.

According to multiple people familiar with the development, the latest round of job cuts was done over the last month or so, separate from the earlier wave of layoffs that took place late last year.

Gojek did not immediately reply to our query on the matter.

Yesterday, Gojek in an internal announcement said that it raised $1.2 billion in fresh capital recently and increased its Series F round total to just under $3 billion. The round was closed last week, said Andre Soelistyo and Kevin Aluwi in a joint memo. No investor names were disclosed.

The firm made the first close of its ongoing Series F round at $1 billion early last year and disclosed unspecified investments from Mitsubishi Motors Corporation, Mitsubishi Corporation, Mitsubishi UFJ Lease & Finance and payments major Visa in July.

In the memo, the co-CEOs alluded to the need for more prudence in managing its resources given the current economic slowdown.

“Good businesses like ours will always attract investment, but as the economic slowdown takes hold, the availability of that investment will be reduced, so we should focus every dollar where we think it will make the most impact and not take our resources for granted,” the memo reads.

One of the biggest catalysts for the current economic downturn is the global outbreak of the coronavirus (COVID-19), which has heavily impacted numerous businesses and sectors, including transportation. Since the announcement of the first COVID-19 positive case in Indonesia, people have been advised to stay at home to avoid the spread of the virus, dealing a huge blow to Gojek’s core business of ride-hailing.

However, some experts believe that job cuts within the tech startup realm were always bound to happen this year, regardless of any external factors.

One of the people close to Gojek who did not want to be named told us that “most of the large technology players are bloated in SE Asia. They need to trim at least 10 per cent.”

Prior to the COVID-19 outbreak, we had reported that several of Indonesia’s prominent tech startups including Gojek, India-headquartered budget hotel chain OYO, its Southeast Asian rival Reddoorz and Indonesian e-commerce unicorn Bukalapak had already begun to lay off employees in pursuit of profitability.

While downsizing by companies is expected to gradually continue throughout the year, the pressures of the virus impact may force some, particularly the bigger companies, to accelerate the process.

The escalated threat has stopped people from travelling for business meetings and events. More recently, the virus spread has prompted employers worldwide to allow employees to work remotely from home, which many believe is bound to adversely impact coordination and productivity, ultimately hampering companies’ overall performance.

The situation was flagged by storied venture capital firm Sequoia Capital, which at the start of this month sent a note to its founders and CEOs to offer guidance on ensuring the health of their business and dealing with repercussions of the COVID-19 outbreak.

The firm, which incidentally is an investor in Gojek, recommended that its portfolio companies brace themselves for turbulence.

The timing of layoffs by Gojek and its peers coincides with the increasing scrutiny on the government’s omnibus bill, which among other things, is looking to tweak current employment regulations surrounding severance pay.

Labor unions earlier this year staged rallies to protest against parts of the bill that seem to potentially reduce several of their rights, including in the case of layoffs. The current labor law requires employers to pay large severance packages, making it hard for companies to fire underperforming employees and discourages them from hiring permanent staff.

The new law is expected to reduce or scrap employee’s rights for severance payments, beyond basic allowances. The calculation for basic severance pay, however, remains unchanged.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.