Uber announced an extra round of layoffs on Tuesday, this time from its product and engineering teams. A total of 435 people were released, or about 8 percent of the total workforce of the rising company. The news was that first reported by TechCrunch, comes a few months after Uber said it would remove 400 employees from its marketing department.
This last dismissal round comes after a brutal second quarter for Uber, with the company missing its revenue forecasts and reporting a record net loss of $ 5.2 billion. In August, Uber confirmed that it had set up a staff freeze for new software engineers and product managers, but now – although it cuts hundreds of employees – the company says the freeze has been lifted.
"Our hope with these changes is to reset and improve day-to-day operations – ruthlessly prioritizing and always keeping ourselves responsible for a high level of performance and agility," a Uber spokesperson said in a statement. "Although it is certainly painful right now, especially for those who are directly affected, we believe that this will result in a much stronger technical organization that will continue to hire some of the very best talents in the world in the future."
In July, Uber released 400 people from its marketing team, many of whom worked at regional offices around the world. This final round also affects regional offices, with 85 percent of the redundant workers in the US, 10 percent in the Asia Pacific region and 5 percent in Europe, the Middle East and Africa.
But even if it reduces costs in its marketing, engineering, and product divisions, Uber increases spending in other areas. The company said it would spend $ 200 million annually to grow its two-year-old freight company, including hiring up to 2,000 new employees for three years.
Uber also plans to spend resources to counter the expected passage of a state law in California that would make it more difficult for companies in a gig economy to classify employees as independent contractors. Uber and rival Lyft say they will go together to spend $ 60 million to fund a voting initiative in the state to create a new classification for directors.
If adopted, the California Assembly Bill 5 could force Uber and Lyft to designate drivers as employees, a move that both companies admit they could end up in a financial margin. Experts estimate that labor costs for Uber can increase by 30 percent if AB5 is assumed.