Alibaba and Tencent have said they are ready to cut big jobs in the wake of China’s crackdown

Alibaba and Tencent are preparing to cut thousands of jobs together in their biggest cut this year as Internet companies try to tackle China’s massive regulatory crackdown, sources said. Although Alibaba has yet to set a group-wide target for layoffs, China’s largest e-commerce company ultimately estimates more than 15 percent of its total workforce, or about 39,000 employees, a source with knowledge of the company’s plans.

Tencent, owner of the influential messaging app WeChat in China, plans to make employees redundant in some of its business units this year, according to three separate sources with knowledge of the matter. The business oversight unit, including video streaming and search, will see headcuts cut from 10 percent to 15 percent this year, one in three said.

Alibaba and Tencent did not immediately respond to a request for comment.

The two companies will have their first major job cuts since Chinese regulators launched an unprecedented campaign a year and a half ago to rein in Internet giants, which has boosted growth over the years due to the licensing-fair system.

Regulatory crackdowns, coupled with a slower economy, have slowed most Internet companies’ sales growth, shattered their share prices and made it harder to raise capital and expand business in the world’s second-largest economy, forcing companies like Alibaba and Tencent to find ways to reduce operating costs. .

Alibaba began firing employees last month, the first source said. It discussed job cuts with several business units last month and left it to them to make specific plans, the source added.

Some business units have moved quickly since then.

Its local consumer service segment, which includes food delivery business and other grocery supply and mapping services, wants to lay off 25 percent of its employees, the second source said.

Yukuo, the company’s video streaming unit, is planning to cut, according to another source. That includes the planned dismissal of a team responsible for creating shows for children, the source said.

Alibaba reported its slowest quarterly revenue growth since it went public in February 2014, driven by declining sales and intense competition in its core business segment. Its stock has fallen more than 60 percent since the beginning of last year.

The company has been under pressure since late 2020 when its billionaire founder Jack Ma publicly criticized China’s regulatory system, triggering an incident that slapped the firm with a record $ 2.8 billion (about Rs 21,200 crore) in fines and launched a series. New rules for the Internet sector.

Alibaba, whose total headcount more than doubled from 2,51,462 last year to 2019, will not run the job ax arbitrarily. Two separate sources said that the retrenchment of growth engine Alibaba Cloud has not been announced yet.

Preparing for ‘winter’

According to sources familiar with Tencent’s plans, the company will start cutting back on less profitable or loss-making businesses such as Tencent Video and Tencent Cloud.

During an internal meeting at Tencent in late 2021, chief executive Pony Ma told workers that the company should prepare itself for the “winter,” according to two other sources who said it had created insecurity among some workers about their jobs.

According to Tencent’s 2021 Interim Report, there were 94,182 employees as of June last year, up from 70,756 a year earlier.

Didi, China’s largest ride-hailing firm, is also planning to reduce its overall headcount by 15 percent because its internal business has been affected by the crackdown, said another person with direct knowledge of the matter.

Didi, the victim of a বার 4.4 billion (about Rs 33,370 crore) New York enrollment last year, has been the subject of a cyber security investigation, with the goal of ending the layoffs by the end of March, the source said.

Didi did not immediately respond to a request for comment.

Thomson Reuters 2022

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