Earlier this week, Grab CEO Anthony Tan sent an email to all employees – outlining the need to cut over 1,000 “Grabbers”. In the email, he said that this retrenchment exercise was not “a shortcut to profitability” but rather to become “fit for the future”.
Here’s what we learned looking at Grab’s memo to its employees, as well as taking other Grab-related information into context.
Grab Is Taking Profitability Very Seriously
In a memo that is meant to deliver news that the company is cutting 11% of its workforce, profitability is discussed right at the start. The memo describes how Grab’s bottom line has improved every quarter since Q1 2022 as a result of its cost management measures and improving efficiency.
While this retrenchment exercise may not be “a shortcut to profitability”, it will definitely help Grab stay lean. This also gives us a good sense of just how highly profitability is being prioritised at Grab.
At the same time, Grab also mentioned that “the cost of capital has gone up, directly impacting the competitive landscape”. For companies that are not profitable, this could be an existential threat, as they no longer have access to cheap money to grow their business. Indeed, Crunchbase states that Grab has raised a total of US$16.5 billion. In contrast, Grab’s market capitalisation today is US$12.4 billion.
Grab Nearly Doubled Employees Since 2020
In the past three years, Grab has nearly doubled its employee-count. Grab had 6,585 employees in 2020. By 2022, this number had swelled to 11,934 – and would have presumably increased by the halfway point in 2023.
Hiring this many employees in such a short span of time will inevitably mean that not all employees may be suitable hires. Without knowing better, it feels like this exercise gives Grab an opportunity to press the reset button – keep employees that are performing and cut those that may not be performing.
Moreover, employees are also becoming costlier, at least in Singapore. MOM’s latest Report on Wage Practices 2022 found that Singapore employees got the highest wage increments in a decade – at 6.5%.
Grab’s Memo Mentions Generative AI
Another interesting mention in the Grab memo is the mention of Generative AI technology. This perhaps hints at what is to come – Grab working with such technology to replace certain functions.
This is also not a big surprise as many industry insiders have warned that white-collar jobs will be the casualty of AI.
Grab Is Not The Only Company Cutting Its Workforce
By many accounts, Grab is a behemoth of a company. It’s logical that they will be representative of the state of the jobs market today.
It is no coincidence that retrenchments in Singapore have consecutively increased in the last three quarters – back above pre-COVID-19 levels. In Q1 2023, 3,820 employees were retrenched. These retrenchments came from higher value job sectors, such as Electronics Manufacturing, Information & Communications, and Financial Services.
Grab, and other companies that retrench workers, will keep these numbers at elevated levels in the coming months.
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