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Asia's superapps follow another hot tech trend: mass layoffs

Grab reveals caps on car numbers make ride-sharing miserable

Asia's superapps have have hopped on to a hot new trend in the tech industry: workforce reductions.

Southeast Asia's Uber-clone turned superapp, Grab, experienced what CEO Anthony Tan referred to as a "strong third quarter that reflects [the company's] accelerated path to profitability."

This included a year-on-year group revenue increase of over 140 percent to $382 million – a 30 percent year-on-year increase in monthly users. The results were thanks to robust demand and recovering driver supply in its transport arm, compounded with growth in its financial services segment (44 percent) and enterprise revenue driven by adverts (113 percent). Deliveries and groceries were also up.

"We're heartened by the demand recovery trends we see in many of our markets. Economies have opened, travel has resumed, and people are heading back to offices," Tan said of Grab's transport segment in its Q3 2022 earnings call.

However, all this positivity didn't save the Singapore-based company from saying it would cut costs. Execs said those cuts would come from reducing fixed costs and being more strategic on incentives and discounts offered to users.

"We began pausing or slowing hiring in various corporate departments. We've also been disciplined to optimize costs in non-headcount overheads," said CFO Peter Oey.

Oey added that Grab slowed hiring and streamlined job functions starting in early 2022.

"Actually, certain departments have reduced their headcount, and we will remain judicious about our hiring. And we're being very deliberate also in choosing not to backfill certain positions created by natural attrition," said Oey, adding that the company would "continue to fine-tune that."

"It's an ongoing initiative that management is very focused on," said the CFO.

The CFO said Grab has cut discretionary spending and direct marketing costs, and the company would continue to reduce spend on travel and office expansions. Tan said the company was "keenly monitoring the macroeconomic uncertainty, inflation, currency fluctuations and recessionary risk post challenges to most businesses."

He added that Grab "remained optimistic about Southeast Asia's growth prospects that are underpinned by a rising tide of digitalization and an expanding consumer class."

Car caps bite

In other news, Grab has revealed in its quarterly earnings call why it believes it believes it's been so hard recently to catch a ride in the Philippines and Singapore – and it's not due to a shortage of drivers.

Grab COO Alex Hungate said the company was experiencing "procedural issues around issuing licenses" in the Phillipines that it was trying to work through by "improving the processes with the authorities."

As for Singapore, Hungate pinned the issue on the supply side of vehicles, thanks to the city-state's policy of capping the number of vehicles on the road by requiring a special and costly certificate to drive them. The ten-year certificate cost over $63,000 for a small car this month.

The high cost of certificates also means most locals rely on a combination of ride-sharing apps, taxis and public transportation to travel. That's good for Grab until it isn't.

The COO said the certificate of entitlement was "creating a barrier to the drivers being able to afford their own cars or even being able to rent cars as well."

The company said they were using artificial intelligence to improve efficiency and thus increase driver earnings and account for the extra costs. No word on whether the company was doing anything to alleviate stranded consumers.

Indonesia's GoTo group, the result of a 2021 merger between Grab rival Gojek and e-commerce platform Tokopedia, said it would lay off 12 percent of its workforce, equating to around 1,300 employees in its Q3 2022 call.

The company said it had already realized $17.1 million so far in 2022 with non-personnel cost-cutting measures.

The company said its largest savings came from "technology work streams, including cloud, software and apps renegotiated contracts."

GoTo CEO Andre Soelistyo also referred [PDF] to his company's third quarter results as "strong" and "rapidly accelerating [GoTo's] path to profitability." Gross revenue increased year-on-year by 30 percent to $10.2 billion. Annual users grew by 20 percent year-on-year and users spent on average about 18 percent more per transaction.

"Global macro uncertainties driven by rising inflation, interest rates and fuel and energy prices, mean it is prudent to continue our focus on cost optimization across the business," reasoned GoTo CFO Jacky Lo.

"Throughout the third quarter, we reduced incentives, eliminated promotional spend on cohorts of unprofitable users, further reduced product marketing spend and continued to develop a program of structural cost savings," added Lo.

Meanwhile, another Asian tech company, Singapore's Sea – which owns both e-commerce site Shopee and online gaming entity Garena – reportedly slashed 7,000, equating to ten percent of its workforce in the last six months.

Sea profitability peaked last year, riding the wave of Covid-induced consumerism and at-home entertainment, and has now fallen back to pre-pandemic levels.

"As part of the previously communicated exercise to optimize operating efficiency, we continue to carefully review our business projects and priorities in line with our goal of achieving self-sufficiency. We are also working to support our affected colleagues during this transition," reported Sea. ®

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