Grab’s job cuts show Singapore tech firm not immune to ‘frosty times’ of higher interest rates, slowing economy: analysts

The cuts follow a global wave of tech lay-offs last year, with Grab’s CEO saying in September that the firm was not at the ‘desperate point’ of cutting jobs

‘Extravagant growth’ pursued by firms including Grab in the pre-pandemic era is unlikely to be replicated in the current economic climate, say analysts

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This is Grab’s first lay-off exercise since 2020, when it showed about 360 employees the door, in response to the pandemic. Photo: Bloomberg

Published: 7:43pm, 21 Jun 2023Updated: 2:08pm, 22 Jun 2023

Southeast Asian tech giant Grab’s decision to slash 1,000 jobs, despite its confidence last year it could avoid large-scale lay-offs, is a sign that no single industry player is immune from the effects of rising interest rates and slowing economic growth, analysts have said.

Nasdaq-listed Grab’s predicament, which mirrors the woes faced by fellow tech firms from Facebook to Amazon and regional players GoTo and SEA, showed that companies used to top-line expansion through aggressive headcount growth and cash injections at a time of cheap debt would now have to cut costs, reduce cash burn and focus on fundamentals.

Grab chief executive Anthony Tan said in a private letter to staff on Tuesday that the redundancies – amounting to 11 per cent of its multinational work force – were a strategic reorganisation to adapt to the business environment, and not a “short cut to profitability”.

Grab chief executive Anthony Tan said that the redundancies were a strategic reorganisation to adapt to the business environment, and not a “short cut to profitability”. Photo: Bloomberg

“We must adapt to the environment in which we operate. Change has never been this fast,” he wrote. “Technology such as generative AI is evolving at breakneck speed. The cost of capital has gone up, directly impacting the competitive landscape.”

The “primary goal” of the move, he wrote, was so the firm could “strategically reorganise ourselves, so that we can move faster, work smarter, and rebalance our resources across our portfolio in line with our longer term strategies”.

This is the firm’s first lay-off exercise since 2020, when it showed about 360 employees the door, in response to the pandemic.

It does suggest that the frosty times of extravagant expenditure and a ‘growth at all cost’ mentality may be coming to an end

Ng Weiyi, National University of Singapore

Last September – as a global wave of tech lay-offs intensified – Grab’s chief operating officer Alex Hungate said that the company had been “very careful and judicious about any hiring” and hence was not at the “desperate” point of cutting jobs.

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