Chinese techs are reportedly laying off around 20%-30% of its staff, joining a lengthy list of tech firms that have started to trim their workforces since last year.
Alibaba Group and Tencent Holdings are preparing to cut tens of thousands of jobs combined this year in one of their biggest layoff rounds, sources said.
While Alibaba is yet to specify a group-wide target for the layoffs, China's biggest e-commerce company could ultimately axe more than 15 per cent of its total workforce, or about 39,000 staff, estimated one of the sources with knowledge of the company's plans.
Tencent, the owner of China's dominant messaging app WeChat, also plans to make employees redundant this year in some of its business units, said three separate sources with knowledge of the matter. Its unit overseeing businesses including video streaming and search will see a 10 per cent-15 per cent headcount cut this year, said one of the three people.
The job cuts at the two companies would be their first major layoffs since Chinese regulators launched an unprecedented campaign a year-and-a-half ago to rein in its tech giants after years of laissez-faire approach that drove growth at breakneck speed.
The regulatory crackdown, coupled with a slowing economy, has sharply slowed sales growth for most of the internet companies, smashed their share prices, and made new capital raising and business expansion much tougher in the world's second-largest economy, forcing companies such as Alibaba and Tencent to look for ways to cut operating costs.
Alibaba started to fire 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 fast since then.
Its local consumer services segment, which includes food delivery business Ele.me and other groceries delivery and mapping services, intends to lay off up to 25 per cent of its employees, said the second source.
The company's video streaming unit Youku is planning layoffs too, according to another source. That includes the planned dismissal of a team responsible for producing shows for kids, the source said.
Alibaba reported in February its slowest quarterly revenue growth since going public in 2014, hit by a fall in sales at its core business segment and intensifying competition. Its stock has tumbled more than 60 per cent since the beginning of last year.
Alibaba, whose total headcount more than doubled to 251,462 last year from 2019, won't be wielding the jobs axe indiscriminately. Two separate sources said staff at growth engine Alibaba Cloud have not been informed of layoffs yet.
Tencent is laying off less than 20% of its staff based on business adjustments, according to the report. Other reports said the company plans to cut 30%, targeting employees older than 35-years-old.
The firm’s Cloud & Smart Industries Business Group (CSIG) and Platform and Content Group (PCG) were taking the biggest hits. At the same time, the Interactive Entertainment Group (IEG) has a much lower layoff rate which only affects non-core businesses.
The CSIG will shed more than 20% of its workforce by the end of 2022. The unit’s online education business division bore the brunt of the downsizing cuts due to the sweeping private education crackdown, which began last July. The edtech unit will merge with other businesses in the future, the report added.
