By Anshuman Daga and Xinghui Kok
SINGAPORE (Reuters) – Grab, Southeast Asia’s largest ride-hailing and food delivery company, does not intend to face mass layoffs like some rivals have, and is hiring selectively while reining in its financial services ambitions.
Chief Operating Officer Alex Hungate said that earlier in the year, Grab was concerned about a global recession and had been “very careful and prudent with any hiring” and therefore didn’t get to the “desperate” point of hiring shutdowns or mass layoffs.
“Around mid-year we did some specific restructuring, but I know other companies have done mass layoffs, so we don’t see ourselves in that category,” Hungate, 56, told Reuters in his first interview since moving to the Singapore-based Grab Holdings Ltd in January.
The company hired positions in data science, mapping technology and other specialty areas, though each hire is a much bigger decision than it used to be, he said.
“They want to make sure we save capital. The hurdle for hiring is definitely higher.”
A household name in Southeast Asia, the decades-old tomb employed about 8,800 people at the end of 2021. Like its peers, it has benefited from a boom in hospitality during the COVID-19 pandemic while ride-sharing has suffered.
As economies open up, demand for food delivery is easing while ride-sharing has yet to fully recover. Tech valuations have also fallen dramatically, and inflation, slower growth and rising interest rates have emerged as risks.
In recent weeks, Southeast Asia’s largest e-commerce company Shopee has cut jobs in various countries and closed some overseas operations after parent company Sea reported mounting losses and scrapped its annual e-commerce forecast.
Hungate, a veteran of the financial services, logistics and food industries, has spearheaded a move away from low-margin businesses while Grab races to break even.
Loss in the second quarter narrowed to $572 million from $801 million a year earlier. But last month it lowered its forecast for gross merchandise volume for the year, blaming a strong dollar and slowing demand for food supplies.
Last month, Grab said it had closed dozens of so-called dark stores — distribution centers for on-demand groceries — and slowed the rollout of its central “cloud kitchen” facilities for deliveries.
“The other area where we’ve really streamlined our strategic intent is financial services, where we’ve significantly expanded off-platform and on-platform payments, wallets, and non-bank financial lending,” Hungate said.
Grab reorganized its fintech unit this year to focus on more lucrative areas, and Reuters reported the exit of some senior executives.
“HIGHER MARGINS”
Grab is now primarily focused on selling its lending products and insurance on its platform to dealers and drivers, who often repay from their income streams on the platform.
“As we make this shift, the business mix will shift toward higher margins,” Hungate said.
Operating in 480 cities across eight countries, Grab has more than five million registered drivers and more than two million merchants on its platform.
The company garnered global attention in 2018 when it took over Uber’s Southeast Asian operations after a costly five-year struggle.
Grab is committed to growing financial services by offering banking and other products with partner Singapore Telecommunications in key markets.
It was listed on Nasdaq in December after a record $40 billion merger with a blank check company.
Hungate said it was “a good time” for the company to revisit how it spends amid increasing scrutiny of finances and the need to respond to shareholders.
“Maybe in a way we were lucky that the discipline of being a public company came at just the right time,” he said, adding that Grab’s $7.7 billion in liquidity meant it was one of the was the best capitalized industry player in Southeast Asia.
Grab’s shares are down about 60% this year and have a market value of $10.6 billion.
Reuters reported last month that Grab’s Indonesian rival GoTo was attempting to raise about $1 billion through a convertible bond issuance.
Hungate said Grab will provide details of its progress toward profitability and other metrics at its first investor day on Tuesday.
(Reporting by Anshuman Daga; Editing by Robert Birsel)
