Responding to the COVID-19 pandemic with a long-term view, Gojek has announced a new strategy which includes shuttering two services and laying off at least 430 employees.
The move will see the internet giant prioritise its high impact, core businesses of payments, transport, and food delivery.
The termination of the two services; GoLife, the at-home massage and cleaning services, along with the company’s food court concept of GoFood Festivals, has come about following a marked decline in demand throughout the pandemic. At the same time, Gojek’s grocery delivery service has increased by more than double and its logistics business grew by 80 percent.
“The decision was part of shutting down verticals that are no longer viable during this period, and making bold bets on changing customer needs,” explained Co-CEOs Andre Soelistyo and Kevin Aluwi in an internal email sent to employees.
Gojek assured its users that this move will be the only COVID-19-related lay offs. The 430 employees in GoLife and GoFood Festivals will receive compensation.
“Gojek HQ employees who are negatively affected by this will be provided with benefits including enhanced severance payments, health insurance scheme extensions, outplacement support, and being allowed to keep their laptops to help with their future job search,” noted the statement.
Many didn’t foresee this decision; the company had just secured an undisclosed investment from Facebook of about US$250 million and PayPal of about US$30-50 million on 3rd June. According to a corporate filing, these two tech giants were registered as shareholders in GoPay on 22nd May, making Facebook a 2.4 percent shareholder and giving PayPal 0.6 percent of the company.
“We had previously optimised the company for growth and impact and we imagined, naively, that the rate of growth would always accelerate. We didn’t plan enough for the inevitable downturn and we are paying for that now,” said Soelistyo.
Gojek’s lay offs mirrors recent actions of fellow ride-hailing company, Grab, which has made redundant at least 360 employees due to the pandemic’s impact on its business and prolonged decline.
Source: Deal Street Asia