By Anshuman Daga and Xinghui Kok
SINGAPORE (Reuters) – Southeast Asia’s largest car reservation and food delivery company Grab isn’t envisioning having to mass lay off workers as some competitors 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 was “extremely careful and prudent about any hiring” and, as a result, had not reached the “desperate” point of hiring freezes or mass layoffs.
“About the middle of the year, we did some kind of specific reorganization, but I know other companies are doing mass layoffs, so we don’t see ourselves in that category,” Hengett, 56, told Reuters in his first interview since joining Singapore. Grab Holdings Ltd in January.
He said the company was hiring for roles in data science, mapping technology and other niche areas even though each appointment was a much bigger decision than it had been before.
“You want to make sure we preserve the capital. The hiring hurdle has definitely been raised.”
The decade-old Grab, a household name in Southeast Asia, had about 8,800 employees at the end of 2021. Like its competitors, it has benefited from a boom in food services during the COVID-19 pandemic, while its ride-hailing operations have struggled.
With economies opening up, the demand for food delivery has begun to decline while delivery service demand has not yet fully recovered. Technology valuations have also fallen dramatically and risks of inflation, slower growth and higher interest rates have emerged.
In recent weeks, Shopee, Southeast Asia’s largest e-commerce company, has cut jobs in various countries and closed some overseas operations after parent Sea company reported rising losses and scrapped its annual e-commerce forecast.
Hengett, a veteran of the financial services, logistics and food sectors, has led a push away from low-margin lines of business as Grab races to turn a profit.
Second-quarter losses narrowed to $572 million from $801 million a year earlier. But last month, it lowered its overall merchandise volume forecast for the year, blaming a strong dollar and waning demand for food delivery.
Last month, Grab said it has closed dozens of so-called dark stores — distribution hubs for on-demand groceries and slowed the deployment of “cloud kitchen” facilities central to delivery.
“Another area where we have really tightened our strategic intent is financial services where we have been significantly increasing payments, wallets and non-bank financial lending off-platform and on our platform,” said Hongett.
Grab reorganized its fintech unit this year to focus on the most profitable areas, and Reuters reported some senior executives exited.
Grab is now primarily focused on selling lending and insurance products on its platform to merchants and drivers who often repay from their income streams on the platform.
“As we make this transition, the business mix will move towards higher margins,” said Hangett.
Grab, which operates in 480 cities in eight countries, has more than five million registered drivers and more than two million merchants on its platform.
It attracted global attention in 2018 when it acquired Southeast Asia’s Uber (NYSE) after a costly five-year battle.
Grab is betting on growing financial services by offering banking and other products with Singapore’s telecommunications partner in key markets.
It listed on Nasdaq in December after a record $40 billion merger with a blank check company.
Hungate said it was “good timing” for the company to look again at how it spends money, given the growing scrutiny of finances and the need to respond to shareholders.
“We may have been fortunate in that the discipline of being a public company came at just the right time,” he said, adding that Grab’s cash of $7.7 billion meant it was one of the best capitalized in the industry in Southeast Asia.
Grab’s shares have fallen about 60% this year to a market capitalization of $10.6 billion.
Reuters reported last month that Indonesian Grab competitor GoTo was seeking to raise about $1 billion through the issuance of convertible bonds.
Hungate said Grab will provide details of its progress toward profitability and other metrics on its first investor day on Tuesday.