Indonesian ride-hailing firm Gojek on Tuesday announced it was laying off about 430 employees, or 9 per cent of its total workforce.
The move, Gojek said, was part of a strategy to prioritise its high-impact core businesses of payments, transport and food delivery in a long-term response to the COVID-19 pandemic.
The new strategy will also see the shuttering of GoLife, which offers at-home massage and cleaning services, as well as GoFood Festivals, Gojek’s physical food court concept. Both services have seen a significant downturn over the past few months amid the pandemic.
In contrast, during the pandemic lockdown, Gojek saw its logistics business grow by 80 per cent, while grocery deliveries more than doubled.
Gojek made the announcement internally on Tuesday night in a series of 16 internal town hall meetings attended by all employees.
In an internal email sent to employees, co-CEOs Andre Soelistyo and Kevin Aluwi explained that the move was part of “focusing on our core services, shutting down verticals that are no longer viable during this period, and making bold bets on changing customer needs.”
Soelistyo and Aluwi also expressed regret at the cuts. Soelistyo said: “We had previously optimised the company for growth and impact and we imagined, naively, that the rate of growth would always accelerate. We didn’t plan enough for the inevitable downturn and we are paying for that now.”
In its statement, Gojek assured that the 430 people laid off, many of whom work for GoLife and GoFood Festivals, will be the only COVID-19-related layoffs and will be entitled to a compensation package.
“Gojek HQ employees who are negatively affected by this will be provided with benefits including enhanced severance payments, health insurance scheme extension, outplacement support and being allowed to keep their laptops to help with their future job search,” the statement said.
The company’s management team explained to employees that it made the decision to focus on business areas with the most impact, primarily encompassing its three core services. The move also includes services that have shown promise such as logistics, which has grown by 80 per cent since the pandemic began, or the grocery delivery business, which has more than doubled.
The move was not anticipated by many as the firm had just secured an undisclosed investment from global tech giants Facebook and PayPal on June 3.
According to indirect sources, Facebook had put around $250 million in the Indonesian decacorn, while PayPal invested $30-50 million. Per the latest investment, the decacorn has now raised more than $3 billion through its ongoing Series F round.
However, some of that funding by the two US majors may have gone to Gojek’s payment arm GoPay. According to a corporate filing, Facebook and PayPal were registered as shareholders in GoPay on May 22. The two firms own 2.4 per cent and 0.6 per cent of the entity, respectively. Two of the largest shareholders in GoPay are Gojek (72.4 per cent) and GIC-owned Gamvest Pte. Ltd (16.8 per cent).
Earlier this month, Gojek announced separate fundraising by its on-demand video platform GoPlay.
The layoffs at Gojek follow those at its ride-hailing rival Grab, which announced it was letting go around 360 of its employees, accounting for about 5 per cent of its workforce, due to the impact of COVID-19 on its business, along with the foreseen prolonged slowdown.
In the note sent to the employee, Grab co-founder Anthony Tan said after reviewing all costs, cut back on discretionary spending, and implemented pay cuts for senior management during the pandemic, the firm still sees the need to cut the number of workers to reduce costs.
The layoffs happened following the firm’s decision to ask employees across the region in late April to take on flexible working arrangements, such as no-pay leave, reduced working hours, and sabbaticals.
In March, the Singapore-headquartered firm had cut the salaries of its senior executives by up to 20 per cent for this year.