Uber CEO says laying off 3,300 workers will help lower prices for customers

[midian182]

Winners & losers: Nobody likes seeing companies laying off people, except maybe their shareholders, but CEO Dara Khosrowshahi says the roughly 3,300 people Uber let go of last week will be a good thing for customers: it will use the savings to reduce prices, apparently.

Uber said last week that it was laying off 10% of its corporate staff, or around 3,300 positions, as the ride-hailing giant looks to reduce management layers. The move marks its biggest cuts since Covid.

At the Goldman Sachs Communacopia + Technology Conference yesterday, Khosrowshahi talked about taking the savings stemming from the layoffs and reinvesting them in the business, which includes lowering prices for customers.

The CEO added that the money saved from insurance will also be used to lower ride prices, something that he believes will keep travelers using Uber's app.

Some of the savings will also be directed toward Uber's autonomous taxi network. The company says it plans to invest over $1 billion in this area as it looks to compete with rivals such as Waymo.

As is so often the case when companies make mass layoffs, Uber performed better than expected in its recent quarterly earnings report. Khosrowshahi himself admitted that the layoffs had come at a time when the firm was in "a position of strength versus weakness."

"Some companies wait," he said. "We don't believe in waiting."

Of course, we only have Khosrowshahi's word that prices are going to drop as a result of the layoffs. CEOs aren't renowned for their honesty, and we've seen promises like these fail to materialize before.

When T-Mobile announced 5,000 job cuts in August 2023, CEO Mike Sievert said the restructuring would help deliver better value and a better customer experience. Less than a year later, the carrier announced price increases for customers on some older plans, including an extra $5 per voice line each month. Better value, it seems, is open to interpretation.

Uber might also want to use some of the money from the layoffs to pay the almost $1 billion fine recently imposed on the company by the EU. Between 2018 and 2022, Uber automatically suspended or deactivated drivers suspected of fraud or receiving poor ratings. The Dutch regulator found that these decisions involved no human review, breaching GDPR rules on automated decisions with significant personal or financial consequences.

Permalink to story:

Uber CEO says laying off 3,300 workers will help lower prices for customers

 

[Megalomaniac]

Frankly, I think this is a bad way to go. I just came back from Vietnam and Cambodia. Using GRAB I was able to easily get a vehicle to show up wherever I was within 5 minutes and take me anywhere I needed to go - even destinations more than 50 miles away. I think it makes more sense to keep the network as active and as open as possible. Some people use Uber to transport medical supplies and other items. Maybe, they could just relegate 3300 workers to a specific duty temporarily.

As for the corporate staff: maybe you can offer temporary pay cuts?

anything to reduce lay offs.

 

[PXAbstraction]

Yeah, we totally believe you guy.

 

[yRaz]

Just make sure to fire the right managers. If you fire the wrong managers then productivity goes down and the same mistakes keep happening. Frankly, I think management should be a job that you have to keep reapplying for and it's not a guaranteed raise once you have it. I've seen the wrong people get promoted and then keep their job until retirement while good people below left for greener pastures.

 

[BobDolesGhost]

Maybe, they could just relegate 3300 workers to a specific duty temporarily. As for the corporate staff: maybe you can offer temporary pay cuts? Anything to reduce lay offs.

People are selfish. Those receiving reduced salaries would pitch an absolute fit. Further, noone would know if they would have been on the chopping block, so basically the entire workforce getting the lower pay would come to work with pitchforks and torches.

(From Article) Some of the savings will also be directed toward Uber's autonomous taxi network. The company says it plans to invest over $1 billion in this area as it looks to compete with rivals such as Waymo.

Ehh? Uber is trying to do autonomous taxis again? Is this new or am I just behind the times? Seems like the echoes of the death of their previous efforts (program shuttered due to deaths of human lives) would squash any new robotaxi program from emerging.

 

[Theinsanegamer]

Why do they need 3300 people to run a ride sharing app?

 

[Eflow]

I smell BS.

Uber's median salary is $98k. Tack on an extra 50% for benefits and the median employee costs around $150k. Multiply that by 3,300 employees and you get a rough annual cost savings of $500 million.

Uber makes over $50 billion in revenue annually. Even if they passed the cost savings on to customers (which they won't), overall rates would fall by roughly 1%.

The company will almost certainly hope to retain the cost savings, turning their $10 billion net income into $10.5 billion. That's the point of running a business, after all, but it would be nice if CEOs didn't talk to us like we were gullible morons.

 

[ScottSoapbox]

Why does Uber need 33,000 employees?

Most of what it does of value is a computer program running on a server.

It got big because of huge revenue from A) scale and B) steadily increasing it's cut of the rideshare price.

They could both fire 50% of their workforce and cut their take of the rideshare by 80%. But neither will happen. At least the exploited drivers will soon be replaced by robots...