Grab, the largest ride-hailing and food delivery startup in Southeast Asia, does not expect to implement mass layoffs, as have some competitors, and is selectively hiring while curbing its financial service ambitions.
Earlier in the year, according to Chief Operating Officer Alex Hungate, Grab was concerned about a global recession and was "very cautious and conservative with any hiring." As a result, there was no "desperate" hiring freeze or mass layoffs.
In his first interview since joining Grab Holdings Ltd in January, Hungate, 56, told Reuters that the company did not engage in mass layoffs.
According to him, the company was hiring for roles in data science, mapping technology, and other specialist sectors, but the number of applicants for each position was far greater than in the past.
"You wish to guarantee that we are capital-effective. Unquestionably, the hiring standards have been raised."
Grab, which has been a household name in Southeast Asia for over a decade, will have over 8,800 employees by the end of 2021. During the COVID-19 pandemic, the company has benefited from an increase in food services, similar to its competitors, but ride-hailing has suffered.
The need for food delivery is falling as economies improve, although the ride-hailing business has yet to fully recover. New threats have emerged, including inflation, sluggish growth, and rising interest rates, as well as a sudden decrease in IT valuations.
In recent weeks, Shopee, the largest e-commerce company in Southeast Asia, has laid off employees in various countries and shut down some foreign operations after its parent company, Sea, announced growing losses and scrapped its annual e-commerce forecast.
Hungate, a veteran of the financial services, logistics, and food industries, has championed a shift away from low-margin business areas as Grab works to become profitable.
The loss for the second quarter reduced from $801 million a year ago to $572 million. Last month, the company lowered its gross merchandise volume forecast for the year, blaming a strong euro and a fall in demand for meal delivery.
Grab announced the closure of dozens of so-called "black stores" - distribution hubs for on-demand food - and paused the implementation of its "cloud kitchen" centralized delivery facilities last month.
"Another area where we've tightened our strategic focus is in financial services, where we've built off-platform and on-platform payments, wallets, and non-bank financial loans," Hungate continued.
This year, Grab revamped its fintech section to focus on more profitable industries, and Reuters reported the departure of a number of senior employees.
'HIGHER MARGINS'
Grab is primarily focused on providing its financial products and insurance on its platform to merchants and drivers, who usually repay from their platform-derived earnings.
"As we make this adjustment, the business mix will become more profitable," Hungate said.
Grab operates in 480 sites in eight countries and has over five million registered drivers and over two million merchants on its network.
After a lengthy five-year battle, in 2018 it attracted global attention by acquiring Uber's (NYSE:UBER) Southeast Asian subsidiary.
Grab is betting on the rise of financial services by supplying banking and other goods in key nations in conjunction with Singapore Telecommunications.
In December, following a record $40 billion merger with a business with a blank check, the company went public on the Nasdaq.
Hungate ruled it "acceptable" for the company to reassess its spending habits in light of the increased scrutiny of finances and the obligation to respond to shareholders.
"Perhaps we were fortunate in that the discipline of being a public company arrived at precisely the right time," he continued, noting that Grab's $7.7 billion cash liquidity made it one of the most well-capitalized industry players in Southeast Asia.
This year, Grab's market value has plummeted by around 60%, to $10.6 billion.
Reuters reported last month that Grab's competitor in Indonesia, GoTo, wanted to raise about $1 billion through a convertible bond sale.
According to Hungate, Grab's progress toward profitability and other indications would be presented during its inaugural investor day on Tuesday.
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