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Startups

Indonesia unicorn Gojek cuts 9% of staff, housekeeping and food courts

Tech group's layoffs follow job losses at rival Grab

The job cuts will likely take place in Gojek's core market, Indonesia. (Photo by Ken Kobayashi) 

JAKARTA -- Gojek, Indonesia's most valuable startup, will shut down some services and slash 9% of its global workforce, becoming the latest Southeast Asian tech group to make cutbacks in response to the coronavirus pandemic.

The move comes after Singapore-based rival Grab announced job cuts of its own last week.

The layoffs by two of the region's biggest startups underscore the depth of the economic toll the coronavirus has had on the region, with even the best-funded local tech companies not immune to the pandemic.

"The biggest challenge is the level of uncertainty ahead and the hard fact that this will forever change how some of our business and products need to operate," Andre Soelistyo and Kevin Aluwi, Gojek co-CEOs, said Tuesday.

"Focusing on our core services, shutting down verticals that are no longer viable during this period, and making bold bets on changing customer needs will ensure that we continue making a positive impact... But we're sorry that the reality of implementing this has to be so painful," they added.

The Indonesian decacorn -- an unlisted company valued at over $10 billion -- said it will close its GoLife service, which offers home cleaning and massage services, as well as GoFood Festivals, the company's physical food courts. As a result of the cutbacks, 430 people, or 9% of Gojek's total employees, many of whom work for the two services to be shut down, will lose their jobs.

The company said in a statement that these layoffs "will be the only COVID-19-related layoffs," adding that it will now "prioritize its high-impact core business of payments, transport and food delivery in a long-term response" to the pandemic.

Gojek operates in five countries in the region, but most job cuts are likely to take place in its core market, Indonesia, the only country to offer GoLife and GoFood Festivals.

The announcement comes after the company said this month that it had secured money from U.S. tech giants Facebook and PayPal as part of its ongoing Series F funding, with the Indonesian company raising over $3 billion in the round. Other investors in Gojek include Google and China's Tencent Holdings.

It also comes just days after its rival Grab announced layoffs of 5% of its global workforce, or 360 people out of its 7,000 employees.

Both companies, vying to become Southeast Asia's leading "superapp," have seen their businesses slammed by the pandemic. While services like food delivery saw a rise in demand as people were forced to stay indoors, demand for their core ride-hailing business plummeted.

Gojek and Grab's announcement is the latest in a line of layoffs by the unicorns -- private companies valued at over $1 billion -- in the region, which, even before the coronavirus pandemic hit, had been keen to slash overhead as investors prioritized a clearer path to profitability over growth.

Bukalapak, an Indonesian e-commerce platform, in September last year said it was letting go of almost 10% of its 2,000-strong workforce, as it switched gears to build a more sustainable company, while another Indonesian unicorn, Traveloka, laid off about 10% of its workforce, or 100 people as the travel sector was decimated by the virus outbreak.

Globally, American ride-hailing giants Uber Technologies and Lyft, as well as home-sharing platform Airbnb, have already announced major layoffs as a result of the pandemic.

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