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Startups

Didi weighs 3,000 job cuts as safety costs mount

Ride-hailer's earnings and passenger count take hit after murders last year

Following the killings of two passengers, Didi Chuxing added a panic button to its app and began recording shared rides.    © Reuters

CHONGQING -- China's biggest ride-hailing startup Didi Chuxing is looking to eliminate roughly 3,000 jobs, according to Chinese media, in an apparent attempt to offset the damages from the murders of two passengers last year.

The reported scale of the layoffs would be equivalent to roughly a quarter of Didi's workforce of 13,000. It appears the ax will fall mostly on the new-services development division, as well as the ride-share segment.

A company spokesperson declined to comment on the job cuts. One Didi insider said the planned terminations are part of its customary practice of "not renewing contracts with low-rated employees," but the total would be higher than normal years.

The ride-hailer ranks its employees on a five-tiered scale, according to Chinese media reports. The company generally does not renew contracts with the lowest-rated staff, but this year it will also let go of the second-lowest rated employees in certain segments, the reports said.

Two passengers using Didi's car-pooling service were killed by drivers in a span of four months last year, prompting state authorities to demand that the startup temporarily halt the service and beef up safety procedures. Not only did the costs of the safety measures add up, but its stalled fleet caused the company to hemorrhage passengers to rivals.

Earnings growth has apparently undershot Didi's expectations. The startup booked 4 billion yuan ($594 million) in losses for the first half of 2018, Chinese media reported. Last December, CEO Cheng Wei told employees that their bonuses will be cut in half because 2018 earnings failed to meet internal goals.

The division responsible for screening drivers and responding to passenger emergencies, as well as the driver-management segment, are expected to be unaffected by the layoffs.

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