Swvl to lay off third of employees in pursuit of ‘cash flow positive’ 2023

Dubai-based ride-sharing company Swvl is laying off a third of its employees, in pursuit of a “cash flow positive” 2023, said company financial officer Youssef Salem in a statement on Monday.

The reduction in the company’s personnel, according to the statement, will target roles in the engineering, product, and customer service departments — roles that the company says can be fully automated.

Technology and startup consultant Mohamed Mousharraf described Swvl’s decision as “abrupt  and cruel,” telling Mada Masr that until last week, there was someone new hired to the company every day.

“The transformation must be gradual,” said Musharraf. Ideally the company would first halt new hires, study their new strategy, and then slowly begin to reduce employment. “But to suddenly lay off a third of your employees only points to a disaster in management.”

Swvl, a mass transport startup, was established in April 2017 by its current Egyptian CEO Mostafa Kandil. After it succeeded in obtaining successive financing packages, the company moved to Dubai, where its current headquarters are located. Swvl then pursued the rapid expansion of its business, providing its services in 10 large cities across Africa, Asia and the Middle East. The company today has its largest offices in Egypt, employing over 500 people.

Over the past few months, the company has made a series of deals, including the acquisition of Volt Lines, its fourth acquisition since August 2021. Swvl bought Berlin-based start-up Door2door in March, Latin American mass transit company ViaPool in November, and Europe-based Shotl, an on-demand bus service that also operates in Brazil.

On March 31, Swvl completed a $1.5-billion merger deal with Cayman Islands-exempted blank-check firm Queen’s Gambit, with the new company, Swvl Holdings Corporation, debuting on the Nasdaq stock exchange the following day.

Swvl’s rapid growth denoted long-term plans, whose abrupt abandonment, Mousharraf said, reflects a warped vision.

“If you do not need 30 percent of the employees you recently hired, then you either realized something was wrong or you did not need them in the first place.”

Musharraf said he expects the decision could push current Swvl employees to look for new jobs in the near future, even if their contracts are yet to be terminated, which, he suggested, may in turn affect investor trust in the company or open the market to more competitors.

While the statement did not mention the exact number of employees to be laid off, it claimed that the company would help “some of them” with finding and securing other jobs.

Despite resorting to a mass dismissal of workers in the hope of finally turning a profit by 2023, Swvl nevertheless noted on Monday that transport and software services are “growing rapidly” thanks to their recent acquisitions, adding in the statement that it will continue to target growth in those areas.

Founder of the Egyptian venture capital firm MenaGurus, Hesham Abdel Ghaffar, told Mada Masr that “regardless of the tough impact,” given the current global economic crises and Swvl’s performance in general, “the company’s decision to lay off employees is a proper step toward profitability.”

Swvl’s move comes weeks after Silicon Valley’s technology startup accelerator Y Combinator advised founders to slow down and consider drastic change in order to save their startups during “the global economic downturn.”  According to news reports, mass layoffs within US startups have reached over 15,000 employees, all within the month of May.