Popular delivery service Glovo has announced a significant reduction in its global workforce, citing a notable drop in orders and internal inefficiencies as primary drivers. This decision comes after a period of rapid expansion fueled by the COVID-19 pandemic, which saw the company's team size surge by 40% year-on-year to 3,900 people. Approximately 250 employees are slated to be laid off, with the impact primarily concentrated across business support functions, recruitment, and data departments within the company's headquarters in Barcelona. Crucially, couriers, pickers, and front-line operational employees are expected to remain unaffected by these workforce adjustments.

Glovo's Chief Executive, Oscar Pierre, attributed the necessity for layoffs to the prevailing macroeconomic situation, characterized by rising interest rates and inflation. He stated, "The current macroeconomic situation, with rising interest rates and inflation, lowers the purchasing power of consumers, and some choose to order less often." Despite these challenges, Pierre affirmed that the company's core vision and strategy remain unchanged. The restructuring is intended to rectify inefficiencies stemming from the company's recent rapid growth and will also enable Glovo to reduce "non-headcount-related operational expenses." The company plans to restrict hiring to only "business-critical roles through the first half of 2023."

Pierre expressed deep regret over the decision, acknowledging the difficulty of saying goodbye to employees who have contributed significantly to building Glovo. He emphasized the importance of explaining the rationale behind the decision and outlining his vision for the future of Glovo and the broader industry.

This layoff announcement arrives amidst a backdrop of escalating legal and regulatory challenges for Glovo. Less than a week prior, Spain's Labour Ministry imposed another substantial fine of 56.7 million euros ($62 million) on the company, which is the local business of Germany’s Delivery Hero (DHER.DE). This penalty was levied for alleged violations of laws governing the hiring of riders. The fine comprised 32.9 million euros for breaches of labor laws, 19 million euros in unpaid social security contributions for riders Glovo had incorrectly classified as self-employed, and 5.2 million euros for visa violations, as inspectors discovered the employment of several foreigners without valid work permits.

Glovo's recent history in Spain has been marked by significant regulatory scrutiny, with total fines for alleged breaches reaching 205 million euros in recent years. Spain's 2021 law stands as one of Europe's pioneering legislative efforts to regulate workers' rights within the burgeoning gig economy. Furthermore, last year saw the European Union conduct raids on the offices of both Glovo and Delivery Hero as part of an investigation into potential infringements of anti-competition law. Insiders reportedly indicated to Sifted that the company's leadership had not adequately prioritized antitrust compliance.