SWVL plans to lay off 32% of its team two months after going public

SWVL said in a statement that it is planning to lay off 32% of its workforce.

The company has over 1,300 employees. 400 people will lose their jobs at the mobility company because of the letting go of over 30% of its workforce.

Tech companies, private and public, have had their valuations taken a beating in the past few months. The effect of an economic downturn has led to them cutting costs and letting go of employees.

This downsizing from the startup adds to the long list of layoffs in the tech industry. According to reports, over 15,000 tech workers have lost their jobs in the U.S. The likes of Bolt, Getir, and Gorillas have dismissed some of their employees while the likes of Twitter and Instacart have not slowed down hiring.

SWVL has been busy for the last 18 months. The company went public via a merger with a U.S. blank check company. It was listed at $10 per share and had a $1.5 billion valuation, but has traded between $4 and $8 for most of the time. Its current valuation is around $500 million.

All eyes are on Swvl as it starts trading on a SPAC combination

SWVL acquired a U.K.-based mass transit group for $100 million a month ago. SWVL has made five acquisitions in the past year, including Germany's door2door and Turkey's Voltlines.

SWVL said that it will need to make reductions on roles that are automated by investing in its engineering and product and support functions teams.

SWVL said in a statement that the planned layoffs will impact teams responsible for functions that have been automated.

SWVL plans to make money next year. One way to get there is to dismiss hundreds of employees and develop its proprietary technology stack.

SWVL is present in 13 markets around the world. The majority of layoffs will come from the company's offices in Pakistan and the United Arab Emirates, according to a source. It is not certain whether SWVL will continue its expansion into new markets such as Mexico and the U.S.

It said in a statement that it plans to support affected employees with monetary, non-monetary and job placement support.

The company's management expects the company to be cash-flow positive in the next few years.

The CEO sent out a letter to his employees. Here is a part of it.

Become Free Cash Flow Profitable in 2023

– Swvl is implementing a portfolio optimization program to focus on its highest profitability operations, enhance efficiency and reduce central costs

– Capitalizes on the highest profitability operations TaaS and SaaS which currently have > 500 contracts in > 10 countries generating > $5m revenue per month

– B2C business is also expected to be contribution margin positive before the end of 2022

– Builds on recent acquisitions of TaaS and SaaS businesses Viapool, Volt Lines, Shotl and pending acquisition of door2door which improve profitability margins

– Benefits from a world class engineering and product team and technology stack which allows for scalability and sustainable growth

Resources

No matter how big, resources are not infinite; cash is meant to be responsibly utilized. We need to be as disciplined as ever, which is why today, May 30, 2022, we announced that our portfolio optimization program to turn cash flow positive in 2023.

As part of that program, we have considered various scenarios that will allow us to demonstrate how much we value our workforce. We believe that Swvl has reached such a level of success only because of the team, and we are also sure that Swvl will continue to get stronger.

What we did:

– Voluntary salary deductions from the top management team

– Reduction of current office spaces

– Freezing our current hiring program

– Freezing travel and accommodation expenses

– Tying expenditures to essential business requirements

People

Effective today, May 30, 2022, we are optimizing our operations in some of our markets while reducing our workforce. The reduction follows an extensive evaluation of team redundancy and how this complements our strategy. We have arranged for one-to-one communications with all of the impacted teammates. Each member of the reduced workforce will receive an invitation to have a conversation with a relevant senior leader to receive clarity on the next steps based on each market’s local laws, severance rules, and best practices.

To those who will leave, I would like to say I am sorry. And more importantly, this is not your fault. You will forever be part of Swvl, and our door will always be open to you in the future. We are incredibly lucky and grateful to have worked with such remarkable talent that many companies would be fortunate to have. Besides your work, what will stay with us is knowing that we genuinely did hire people better than us. I am sure you will continue to have a significant impact wherever you go, as you have done day in and day out at Swvl.

Easing the transition for impacted employees:

– Severance: All impacted employees to receive severance based on gross salary and complete cash payout

– Provident Fund, Gratuity & Leave encashment other legal payments

– All RSU to be considered vested

– Expense claims/OPD claims to be cleared

– All Final Settlements to be taxed as per local requirement

– Payout Transfer to be complete in the next 21 days

Medical Insurance: to be extended for all entitled employees

Stock Options: all unvested stocks for impacted employees to continue to vest as per schedule

Alumni Directory: an alumni network directory to support our impacted workforce

No interview policy for Rejoiners

Laptops to be retained by employees subject to data security requirements