Will Uber Lay Off 20 Percent of Its Workforce Due to COVID-19?

A new report in The Information suggests that Uber may lay off up to 20 percent of the company’s employees, including engineers and other technologists, in a bid to survive the impact of COVID-19 on its business. 

The article also said that more than 800 members of Uber’s engineering group could lose their jobs. Uber chief technology officer Thuan Pham has already resigned, according to filings with the SEC (hat tip to The Verge for the link). Before the pandemic, the company had been trying to inch its way toward profitability; but with ridership declining 60-70 percent in major cities (according to CEO Dara Khosrowshahi), the goal now is survival.  

Although Uber Eats allows the company to draw revenue from food deliveries, that’s not enough to make up for the shortfall from losing riders. 

Even before the crisis, Uber had been laying off workers. In October 2019, for example, the company announced that 350 employees would be cut from a number of divisions, including the Advanced Technologies Group and other tech-centric teams. That followed 435 employees cut in September, along with 400 in July, as the company sought to recover from a few years of messy internal and external crises crowned by an underwhelming IPO. 

“We all have to play a part by establishing a new normal in how we work,” Khosrowshahi wrote in an email to employees after the October layoffs. “Identifying and eliminating duplicate work, upholding high standards for performance, giving direct feedback and taking action when expectations aren’t being met, and eliminating the bureaucracy that tends to creep as companies grow.”

One big question is how other “gig economy” firms will negotiate the challenges of COVID-19. Instacart, DoorDash, and similar firms are benefitting from a rising need for deliveries of all types. Those spikes in demand, in turn, are generating a need for software engineers and others who can build out reliable tech infrastructure. However, these companies must also engage in a delicate dance with the drivers who deliver the food, the restaurants and stores that supply it, and the investors who are leery of any kind of downturn

Using data from levels.fyi, which crowdsources compensation data, take a look at how Uber’s payouts for entry-level software engineers compares to Lyft, its primary competitor in the rideshare space:

Now look at how Uber compares to other gig-economy firms when it comes to engineer compensation, particularly at the senior levels:

In other words, Uber is quite generous when it comes to technologist compensation. If it resorts to layoffs, though, chances are good that other gig-economy firms could use those same engineering skills to improve their own infrastructure.

For more COVID-19 content, check out the COVID-19 Jobs Resource Center.