Tech firms post mixed fortunes in Covid times

Technology firms have been some of the biggest gainers during the lockdowns and restrictions that have arisen from Covid-19 pandemic.

The video conferencing apps, delivery apps and e-learning apps have been on growth in popularity and use.

This said the tech segment has also been disrupted by the pandemic restrictions, including leading to the near crumble of some players in the segment.

One of the most prominent of the international disrupters being disrupted was AirBnB. With travel on hold in most countries, the service which had become the go-to alternative for the hotel segment had to face the same reality — the uncertainty in the future of travel.

As such, the firm laid off 25 per cent of its workforce — 1,900 employees — to cut costs as the company re-evaluated its strategy.

Reduced salaries

Similarly, online travel company TripAdvisor cut its workforce by 25 per cent, closed some of its offices and reduced salaries and work hours of most employees as a result of near-zero bookings across restaurants and hotels.

The situation for companies in the travel and hotel tech industry locally is not in any better shoes.

Local app e-ticketing start-up Buupass, which has been among the services hailed for creating sanity in the chaotic local road transport industry was hit hard.

The e-ticketing firm has a travel marketplace that gives travellers access to bus, train and flight tickets.

“We are the sole provider of Madaraka Express – SGR – train in Kenya and have booked more than three million tickets. We have more than ten bus operators on BuuPass platform and more than 30 airlines on BuuPass flights,” said Sonia Kabra, Buupass Kenya director and co-founder.

The service, which had 12 bus operators signed up such as Easy Coach, Greenline and Modern Coast, among others, was hard hit by the restricted movement in and out of several counties, including Nairobi. “When the lockdown and cessation of movement hit us, intercity passenger travel went to almost zero as most bus companies originate from Nairobi or Mombasa,” said Ms Kabra.

“Kenyan transport operators are counting billions of losses after more than 100 days of cessation on movement outside Nairobi, Mombasa and other major cities.

“BuuPass is a Kenyan start-up that works with transport operators to provide digital solutions that enable convenient and reliable movement for commuters and goods.”

Even with the resumption of travel into and out of this counties, the new bus capacity restrictions also means that there is a limited number of customers as buses can only carry up to 60 per cent of their capacity.

Despite the firm being a disrupter in the chaotic transport industry, it has not been saved from the ravages of the pandemic. It has been forced to issue pay cuts for its staff and send half of the employees on unpaid leave from June to keep afloat. “Since the announcement of the cessation movement, BuuPass has had zero transactions for more than 100 days.

“As a start-up, it has been difficult to stay afloat. However, the parcel business was going well for the companies,” said Ms Kabra.

This has also spurred the firm to come up with new revenue models, including last first and last mile collection and delivery of parcels using partners that have motorbikes and vans.

“The customer doesn’t need to go to the station hence protecting the customer from the risk of contracting Covid-19 as well as providing convenience to the customer,” said Ms Kabra.

Taxi-hailing firm Uber laid off 3,700 employees and shut 45 offices as the lockdowns across major towns and cities in the world as well as curfews meant reduced demand for the services. The firm laid off 25 per cent of its workforce since the beginning of the pandemic to save $1 billion in costs.

Locally, the e-hailing apps including Uber, Bolt and Little have had to venture into alternative services from courier services to grocery delivery as an alternative revenue stream as more people operate from home.

“During this crisis, we have been working around the clock to find innovative ways to leverage our technology to assist consumers to move essential care packages while also enhancing earnings opportunities for drivers on our platform,” said Brian Njao, country manager for Uber in Kenya when launching the parcel delivery service.

Data from the Kenya National Bureau of Statistics’ Survey on Socio-Economic Impact of Covid-19 on Households report showed that 26.9 per cent of respondents reported they travelled less often. Respondents who travelled less often but with more difficulty were 17.4 per cent.

The report further showed that 14 per cent had changed their means of transport to counter the effects of the pandemic.

The majority (62.2 per cent) of these opted to walk while 19.4 per cent chose to use boda bodas. With local and international flights only just resuming, online booking became a near-obsolete service as it was highly underutilised

Data from Central Bank of Kenya’s Monetary Policy Committee report for July shows that there was only a two per cent occupancy/booking for July.

As much as the forward bookings are expected to rise over the next four months, they will still be just about a quarter of the occupancy rate in February, just before the pandemic hit locally.

Spanish booking firm Amadeus, which has operations in Kenya, according to Reuters saw a 57.5 per cent slump in its first-quarter net profit and its executives expecting a “bad second quarter”.

Amadeus, the world’s biggest provider of booking services, has had to shift resources from longer-term projects to ones that generate more revenues, such as services for airlines.

Tech hiring firm Andela was also forced to lay off 135 of its senior staff in May as the slowdown in business partly due to the pandemic required the firm supported by Venture Capital funding to cut its wage bill.