Recently, technology companies such as Zoom and Amazon have witnessed a dramatic boom in usage whilst some businesses are facing hardship due to the global pandemic. Companies such as Airbnb and Uber, ventures that rely on people travelling and vacating in different parts of the world are suffering significantly. This brings an uncertain future for those companies that were seen to be innovative before the global pandemic.
This is the reality of the economic situation caused by COVID-19. Last week, Uber based in San Francisco, announced a substantial cut to their workforce letting go 3,700 workers, which makes up around 14% of the overall workforce. As well as this, 180 driver resource centres will permanently close, which accounts for 40% of the centres around the world. The Security and Exchange Commission Filing announced this. Since the business has decided to implement a hiring freeze, departments including customer service and recruitment are suffering the most.
COVID-19 has considerably affected the entire business operations for Uber, including its corporate strategy. Its financial performance has taken a hit, as well as the confidence of its ability to attract new drivers to the business after the coronavirus pandemic has ended. Uber’s share price has taken an impact with its price falling by more than 4% to $26.90 after the decision to reduce the number of staff working for the business. As the business takes on employees as contract drivers and not official employees, Uber is protected from offering full benefits. This has seen a controversial hit back. As the Washington Post reports “California sued Uber and Lyft on Tuesday, alleging the drivers are misclassified as independent contractors under a new state law”. Uber is unfortunately suffering from disappointed employees as well as a legal dispute.
Uber’s CEO Dara Khosrowshahi expressed he would be sacrificing his own salary for the rest of 2020 in an attempt to help the business financially survive. To add to this, Uber will be pausing any investment into new products.
Uber isn’t the only tech company suffering. One of Uber’s main competitors, Lyft, is laying off employees too, 982 members and deciding to put 288 of its employees on the furlough scheme. It has seen a 75% drop in customers for the month of April alone. Even though, as weeks go on the business has stabilized customer numbers instead of dropping, it is still seeing an average of 70% drop. To add to this, Airbnb announced it will be letting go of 1,900 members of staff which accounts to around 25% of its complete work force. WeWork was one of the first companies to release the negative effects of the pandemic, a business that provides open office space for business personnel to hire. In March it announced it would lay off 250 employees with more announcements in upcoming months.
Even though the Uber branch of the business is majorly seeing the impact of COVID-19, the other section of the business UberEats has seen a rapid increase in demand as more people are spending their income on ordering their favorite meals to their door.
Not all businesses are suffering though, Amazon is thriving with an increasing number of people ordering items online. As the Guardian reports “In the first three months of 2020, Amazon made more than $33m per hour” this figure has been boosted as the message remains in many countries to stay at home. Delivery businesses are also flourishing causing them to hire more employees such as Instacart, 300,000 workers were employed to help the demand of the pandemic in less than a month after an increasing number started to order groceries online in order to avoid any unnecessary contact. The group call service Zoom has seen a dramatic increase in usage as more people find ways to stay interconnected with friends and family, it’s share price has risen rapidly from $36 in 2019 to $150 recently.
As businesses at the forefront of innovation suffer because of travel restrictions and the advice to stay at home, it becomes evident the challenge has just begun. The timeframe of returning to business as usual is uncertain. Uminski, a tech industry analyst spoke to the Guardian expressing “It’s well understood now that the impact Covid-19 has had on the entire travel industry is absolutely colossal,” adding “Not only has the industry stopped, it will never be exactly the same again and nobody knows exactly what it is going to look like”.
Technological businesses that were booming prior to COVID-19 have come to a standstill, it can be predicted this will be the cause for the unforeseeable future. Until a vaccine for this world pandemic is found, more businesses may be finding themselves in the same situation.