Uber to lay off 10% of staff in biggest cuts since COVID

By Akash Sriram

Sept 2 (Reuters) - Uber Technologies will lay off about 3,300 employees, or 10% of staff, in its largest cuts since the COVID-19 pandemic, to better navigate the rise of robotaxis encroaching on its ride-hailing business.

The cuts will flatten management layers, reducing organizational complexity that was built during a period of rapid growth but is now proving a hurdle to decision-making, CEO Dara Khosrowshahi said in a note to employees on Wednesday.

Unlike several tech executives, however, Khosrowshahi did not blame the cuts on AI.

A push to adopt AI and the efficiencies it can unlock have driven widespread job cuts across the tech sector this year, with tracking website layoffs.fyi putting the overall number at more than 123,000 across nearly 390 companies.

"A leaner organization will mean clearer ownership, faster decisions, and more time spent building rather than coordinating. It will also generate savings that we intend to reinvest in growth, innovation, and the capabilities that will matter most over the coming years," Khosrowshahi said.

Uber shares rose more than 2% before the bell. The stock has underperformed the S&P 500 and rival Lyft this year with a near 8% decline driven by worries about growing competition.

GROWING ROBOTAXI COMPETITION

Some of the concern stems from reports of growing tension between Uber and Waymo, the biggest U.S. robotaxi operator, which runs its cars through Uber's app in Austin and Atlanta.

Waymo has also been expanding into new markets without Uber, while rivals such as Tesla double down on robotaxis, feeding fears that a growing fleet of driverless cars could erode Uber's lucrative role as the middleman between vehicles and riders.

To defend its position, Uber plans to put more than $10 billion into robotaxis in the coming years, backing the companies developing autonomous-driving systems and positioning itself as a go-to marketplace for the driverless rides.

"As AV tech and relationships grow and expand - there is a different type of employee needed to scale that business than one built around human drivers and all the cost to serve entailed with that, including management layers," said Adam Ballantyne, analyst at Uber shareholder Cambiar Investors.

As part of Wednesday's overhaul, Uber will reduce the number of employees positioned seven or more reporting layers below the CEO by 20% and cut the number of teams with only one or two direct reports by nearly half. It will also combine some teams and concentrate much of its staff presence around key hubs.

It will also limit fully remote roles to about 1% of staff, while maintaining its three-day office policy.

The layoffs, first reported by Bloomberg News, are Uber's largest since May 2020, when a pandemic-driven demand collapse forced it to shed 6,700 jobs, or nearly a quarter of its staff.

Uber had about 34,000 employees globally at the end of last year, according to its annual report.

(Reporting by Akash Sriram and Aditya Soni in Bengaluru; Editing by Devika Syamnath)