Company’s core ride-hailing business is under immense financial and regulatory pressure
Uber Technologies Inc. is launching an app aimed at pairing businesses with temporary workers in an effort to bring in more revenue as the company struggles to turn a profit.
The Uber Works app, launching in Chicago on Friday, will match workers such as chefs and cleaners with companies looking to fill a temporary opening, the company said late Wednesday.
The app enables users to sift through jobs by location, pay and skills, Uber said, adding that it spent the past year testing it.Uber’s move to offer a service to gig workers, rather than employ them directly, comes as its mainstay business is under immense financial and regulatory pressure. Last month, California passed employment legislation intended to force companies that rely on gig workers to reclassify such independent contractors as employees. Uber and rival Lyft Inc.have spent much of the year opposing it, arguing that it would introduce new costs and hurt their drivers, who want flexibility.
The law threatens to upend Uber’s business model, which relies on gig workers such as drivers, and further erode its bottom line. The company in August posted its largest quarterly loss, weighed down by competition in growth markets such as Latin America, slowing growth in its core ride-hailing business and one-time expenses related to its initial public offering. Revenue grew 14% to $3.17 billion in the second quarter, Uber’s smallest quarterly increase. The company laid off more than 400 technical employees last month.
Uber wants to tap into a lucrative market with its new app. More than a third of the U.S. workforce, or 55 million people, identified as gig workers in 2017, according to the Bureau of Labor Statistics. The bureau projected such workers would account for 43% of the workforce by 2020.
Uber Works won’t be the first to connect temporary workers with potential employers. Venture-capital firms including Sequoia Capital back other players that offer a similar service. Nevertheless, it shows how aggressively Uber is expanding into new areas.
Chief Executive Dara Khosrowshahi said last week that the company was experimenting with merging some of its services onto the same app. Uber’s offerings include ride-sharing, food delivery and on-demand helicopters.
It is separately ramping up hiring for its freight business at a planned hub in Chicago, which is becoming a testing ground for tech companies.