Alibaba and Tencent, two of China’s leading Internet companies, are reportedly preparing to cut tens of thousands of jobs this year, which would be the biggest layoffs since the companies were founded.
Although Alibaba has not yet made clear the number of layoffs and the positions involved, according to rumors in the online community, Alibaba, China’s largest e-commerce platform, will cut more than 15 percent of its workforce this time around, and according to the current size of the company’s workforce, about 39,000 people will leave Alibaba.
Tencent, another online technology major, is also planning to reduce its workforce this year, with its video streaming and search business units among the cuts this year, involving up to 15 percent of its employees.
China’s increasing regulation of online technology companies since last year, coupled with the economic slowdown, has led to declining sales, falling stock prices and slower business expansion for Internet companies, all of which have forced major players like Alibaba and Tencent to find ways to cut costs, with layoffs the most direct and effective way to do so.
According to sources in the industry, Alibaba has launched the company’s layoffs last month, with several business units within the company formulating layoff plans for each department.
Alibaba began laying off employees last month, the first source said. The company discussed the layoffs with several business units last month and let them make their own specific plans, the source added. Alibaba’s local consumer services unit plans to cut up to 25 percent of its workforce, with Eleme, which has a high number of users, and its mapping services unit among them. Alibaba’s video streaming platform Youku is also among the layoffs, with Youku about to disband the team responsible for making children’s video products.
Alibaba reported earnings in February that showed its single-quarter revenue grew at its lowest rate since its IPO in 2014, hurt by declining sales and increased competition in its core business units. Its stock has fallen more than 60 percent since the beginning of last year.
Alibaba now has more than 25,000 employees, nearly double the number in 2019, and employees of Alibaba Cloud, a key division in Alibaba’s revenue growth, have not been notified of layoffs.
Tencent’s layoffs will be swung to less profitable or loss-making departments, such as Tencent Video, which has been criticized by many users.
Tencent CEO Ma Huateng said in an internal meeting at the end of 2021 that the company should be ready to spend the “winter”, meaning that some of the company’s employees are afraid that their jobs will not be saved this year.
According to another source, Didi, China’s largest online car-hailing company, also reported layoffs and plans to lay off 15% of its workforce. After Didi was listed on the New York Stock Exchange last year, it has been under investigation by relevant departments, and its market value has been shrinking. This layoff will be completed by the end of this month. Source