Uber has laid off 435 employees across its product and engineering teams, a media report said.
Combined, the layoffs represent about 8% of the organisation, with 170 people leaving the product team and 265 people leaving the engineering team, TechCrunch reported.
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The layoffs had no effect on Eats, which is one of Uber's top-performing products, and Freight, a TechCrunch source "familiar with the situation" said.
Meanwhile, the company is lifting the hiring freeze on the product and engineering teams that had been in effect since early August, according to the same source.
"Our hope with these changes is to reset and improve how we work day to day – ruthlessly prioritising, and always holding ourselves accountable to a high bar of performance and agility," an Uber spokesperson told TechCrunch.
"While certainly painful in the moment, especially for those directly affected, we believe that this will result in a much stronger technical organisation, which going forward will continue to hire some of the very best talent around the world."
Of those laid off, more than 85% are based in the US, 10% are in Asia-Pacific and 5% are in Europe, the Middle East and Africa, according to the TechCrunch source.
The report said the layoffs came after Uber CEO Dara Khosrowshahi asked every member of his executive leadership team if they were to start from scratch, would their respective organisations look the way they do today?
"After careful consideration, our engineering and product leaders concluded the answer to this question in many respects was 'no'," the spokesperson said.
Those managers are chief product officer Manik Gupta and CTO Thuan Pham. They looked at team size, identified duplicate roles and overlapping work, as well as individual performance to determine who would be laid off, the TechCrunch source said. They landed on focusing more on the design and research teams from the product side.
"Previously, to meet the demands of a hyper-growth startup, we hired rapidly and in a decentralised way," the spokesperson said.
"While this worked for Uber in the past, now that we have over 27,000 full time employees in cities around the world, we need to shift how we design our organisations: lean, exceptionally high-performing teams, with clear mandates and the ability to execute faster than our competitors."
TechCrunch said these layoffs come shortly after Uber laid off 400 people from its marketing team. In Q2 2019, its over US$5bn – its biggest quarterly revenue loss to date – though a chunk of its losses were a result of stock-based compensation expenses for employees following the company's IPO in May. While it may seem these layoffs are in response to those quarterly losses, Uber said the conversations had been ongoing.
In a message to employees about the layoffs on Tuesday that was viewed by the New York Times, Uber's chief executive, Dara Khosrowshahi, said the company had gone off course as it grew and must streamline to regain its competitive edge.
"Everybody knows that Uber can't lose billions of dollars a quarter forever, but it's always been a question of when the money might run out," Harry Campbell, a ride-hailing driver and founder of the industry website The Rideshare Guy, told the New York Times.
"We've seen Uber institute a number of cost-cutting measures at the driver and rider level and now the cuts are coming to the corporate side of the business in order to move towards profitability."
In his email, Khosrowshahi said he was not making job cuts to appease investors.
"We are not doing this for Wall Street. We are doing this for Uber," he wrote, according to the NYT.
The paper noted Uber faces other labour problems. On Tuesday, California lawmakers approved a bill that would force companies like Uber and Lyft to treat contract workers as employees. Uber relies on independent contractors as drivers, as their freelance status helps keep costs down by allowing the company to not provide full time benefits or pay. Uber and other gig economy companies worked for months to cut a deal with labour groups to carve out ride hailing drivers from the bill, but those negotiations failed. The bill is widely expected to pass.
