Eisya A. Eloksari, Jakarta – Indonesian ride-hailing decacorn Gojek announced on Tuesday evening that it would lay off 430 employees, around 9 percent of its total workforce, as the COVID-19 pandemic has battered demand for its lifestyle services.
The layoff follows the company's plan to close down its lifestyle division GoLife, which includes massage and cleaning services, as well as its food court division GoFood Festival, as both saw "significant decrease in demand" during the pandemic, according to the company's press statement.
Gojek, which currently operates in five countries in Southeast Asia, will instead focus on its core business, namely its ride-hailing service, food delivery and e-payment solutions, downsizing its overall structure as part of the company's long-term plan to adapt to the pandemic.
"The biggest challenge is the remaining uncertainties in the future, and the hurtful fact is that this will forever change the way we operate our business and the products we offer," the CEO duo of Andre Soelistyo and Kevin Aluwi said in a joint statement on Tuesday. "We have to respond to what's out there and increase our focus to build a strong, more efficient business to survive."
The CEOs said this would be the only employee reduction Gojek would make amid the pandemic, and the laid-off employees would receive severance pay, an equity arrangement and an outplacement program.
The social restrictions imposed in multiple regions in Indonesia to contain the virus have battered the ride-hailing industry and the gig economy, as people stay at home to avoid person-to-person contact.
Going forward, the company plans to develop its logistics service, which grew by 80 percent, as well as its online grocery sector, which had doubled its transactions since the beginning of the COVID-19 outbreak.
Previously, Gojek reported that its groceries, food and package delivery services were still growing amid the pandemic, despite the steep blow to its passenger transportation business.
In April, the company's senior management cut their salaries to allocate more than Rp 100 billion (US7.09 million) to help drivers and employees cope with low demand during the COVID-19 pandemic.
"We have done all of the measures to optimize the company to continue growing and giving impacts," Andre stated in a note to the company's employees.
Recently, Gojek's e-wallet GoPay received an undisclosed amount of investment from Facebook and PayPal in a new round of funding.
Gojek's announcement on the layoff comes just one week after its Southeast Asia ride-hailing rival Grab announced a regionwide layoff of about 5 percent of its employees, citing "the stark impact of COVID-19."