Alibaba Group Holding Ltd and Tencent Holdings Ltd are preparing to cut tens of thousands of workers in the biggest round of layoffs this year.
A source familiar with the company's forecast said Alibaba has not set a target for layoffs across the group, China's largest e-commerce company could eventually cut more than 15% of its total workforce, or about 39,000 employees.
Tencent, owner of China's dominant messaging app WeChat, also plans to cut jobs in some of its business units this year, three people familiar with the matter said.
One of three people familiar with the matter said his division, which handles businesses such as video streaming and search, will cut 10% to 15% of its workforce this year. Alibaba and Tencent did not immediately respond to requests for comment.
The layoffs at the two companies would be the first large-scale layoffs since Chinese regulators launched an unprecedented campaign a year and a half ago to rein in its internet giant, after years of pursuing a high-speed drive.
The regulatory crackdown, combined with a slowing economy, has led to a decline in sales for most internet companies in the country.
Falling share prices, making new financing difficult, and business expansion far more difficult in the world's second-largest economy, are forcing companies like Alibaba and Tencent to look for ways to cut operating costs.
The first source said Alibaba began laying off employees last month. The source added that they discussed layoffs with several business units last month and let them work out specific plans. Since then, several business units have grown rapidly.
Meanwhile, a second source said its local consumer services division, Ele.me, which includes food delivery businesses and delivery services, other grocery mapping, intends to cut as much as 25% of its workforce.
The company's video streaming unit, Youku, is also planning layoffs. That includes plans to fire the team responsible for producing shows for children.
Alibaba in February reported its slowest quarterly revenue growth since going public in 2014, hit by declining sales in its core business segments and intensifying competition. Its shares have fallen more than 60% since the start of last year.
The company has been under pressure since late 2020 when billionaire founder Jack Ma publicly criticized China's regulatory system in late 2020, sparking a series of incidents that saw Beijing slapped the company with a $2.8 billion fine and introduced a new set of rules for its internet industry.
Alibaba, whose total workforce more than doubled to 251,462 last year from 2019. One of the sources said employees at Alibaba Cloud had not been notified of the layoffs.
Meanwhile, according to sources familiar with Tencent's plans, the company's layoffs will also start in less profitable or loss-making businesses such as Tencent Video and Tencent Cloud.
At a meeting at Tencent in late 2021, CEO Ma Huateng told employees that the company should prepare for "winter," according to two other sources. This sparked insecurity among some staff about their jobs.
According to the 2021 interim report, Tencent had 94,182 employees as of June last year, compared to the previous year's 70,756 employees.
China's largest ride-hailing company Didi Global (DIDI.N), also plans to reduce its workforce by 15% as domestic operations are affected by the crackdown.
Didi, who has been under cybersecurity investigation following its $4.4 billion IPO in New York last year, aims to complete the layoffs by the end of March, the sources said. Didi did not immediately respond to a request for comment.
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