Source: The National
Ride-hailing company Careem is shedding 31 per cent of its workforce to offset the impact of coronavirus-related restrictions on its business across the Middle East, North Africa and Pakistan, with the company’s chief executive not expecting a recovery until late next year.
The pandemic, which has tipped the global economy towards a recession expected to be the deepest since the Great Depression, pushed Careem’s core ride-hailing business down by as much as 90 per cent and its delivery business by 60 per cent in some of the markets it operates in, Mudassir Sheikha told The National.
The company has also paused further investment plans in its mass transport 'Careem BUS' venture as it tries to conserve cash to ride out the storm.
“Our [overall] business is down 80 per cent and with that sort of reduction in the business, our losses are multiplying rapidly as well,” Mr Sheikha, who is also one of the Dubai company's co-founders, said.
“Unfortunately, we had to look at our people cost, which is of course the most disruptive change you could make in an organisation … that still wants to go after the future opportunities … but still has to survive in the short-term.”
Covid-19 has infected more than 3.5 million people and killed more than 247,000 worldwide, according to Johns Hopkins University.
The pandemic has forced governments to close borders, shut all non-essential businesses and confine billions across continents to their homes in a bid to stem the spread of the virus.
Careem reacted quickly to the outbreak and with its cost saving exercise, has “better appreciation of the recovery timeline”, Mr Sheikha said.
“The current expectation is that the recovery will not happen fully until sometime late next year” to the same level as before the crisis.
The job cuts will see Careem reduce its headcount across the board, according to Mr Sheikha’s blog post to Careem employees.
"There is no easy way to say this, so I will get straight to the point: starting tomorrow and for the next three days, 536 of our colleagues who make up 31 per cent of Careem will leave us. We delayed this decision as long as possible so that we could exhaust all other means to secure Careem," Mr Sheikha wrote.
Over the last seven weeks the company has looked critically at its cost base and stopped all non-essential spending, which also includes indefinitely halting the new benefits announced earlier in the year.
"While we have achieved significant savings from these efforts, they have sadly not been enough," he wrote.
"While the details vary slightly from market to market, we have arranged at least three months of severance pay, one month of equity vesting, and where relevant, extended visa and medical insurance for you and your families until the end of the year", he wrote.
The aim of the reorganisation is to make Careem a self-sustaining company by the end of this year, he said without specifying how much Careem would save in costs.