Careem Cuts 31% of Workforce Over COVID-19 Downturn

Ride-sharing service Careem cut 536 jobs in the wake of the global coronavirus pandemic on Monday, while parent company Uber says it is pulling Uber Eats from Saudi Arabia and Egypt due to low returns.

  • By externalwire | May 4, 2020,5:24 pm
Careem Cuts 31% of Workforce Over COVID-19 Downturn

In a letter to staff, Careem CEO Mudassir Sheikha said that despite cost-saving efforts, the company would have to cut jobs in the face of an 80% downturn in business and mounting COVID-19 related losses. The announcement comes after parent company Uber said on Monday that it will stop the UberEats app in eight low-performing markets, including Egypt and Saudi Arabia. 

“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,” Sheika told employees on May 4. 

The massive global economic turn-down precipitated by the coronavirus pandemic has hit the broader transport industry hard, and ride-sharing apps such as Uber and Careem are no exception. With COVID-19 restrictions forcing regular users to stay locked-down at home, Dubai-based Careem, which operates in the Middle East, North Africa, and Pakistan, reports the activity of its core ride-hailing business has plummeted by 90%.

The company began diversifying into food delivery before the pandemic, working towards becoming a “Super App,” but food delivery is also down up to 60% as coronavirus curbs forced many food businesses to close.

“Our [overall] business is down 80 per cent and with that sort of reduction in the business, our losses are multiplying rapidly as well,” Sheikha told the National on Monday.

Balancing business and employee needs

Sheikha said he had to prioritize the company’s long term survival, and after reducing operating costs across the board, job cuts were the next logical option as the recovery timeline remains “alarmingly unknown.” Careem is currently operating under the conservative expectation “that the recovery will not happen fully until sometime late next year,” the CEO added. 

A new range of staff benefits announced earlier in 2020 are now on pause, as part of cost-saving measures, but Sheikha assured staff a generous severance package will be forthcoming. 

“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 told employees.

UberEats gets the chop

On Monday, global ride-sharing giant Uber, who purchased Careem for $3.1 billion in 2019, announced it is canceling UberEats operations in eight low-performing markets. The decision means UberEats will stop running on June 4 in the Czech Republic, Egypt, Saudi Arabia, Honduras, Romania, Ukraine, Uruguay, and the United Arab Emirates (UAE).

“This continues our strategy of focusing our energy and resources on our top Eats markets around the world,” an Uber spokesperson told Reuters.  

UberEats in the MENA countries will transfer to Careem, in an attempt to consolidate the platform during the COVID-19 crisis, and in line with its “Super App” strategy. The company announced the “aggressive” expansion strategy in January 2020 and Careem’s CEO said it is committed to “protecting all investments related [to it] including [the] team that is working on the super app.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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