Chinese tech giant Tencent is reportedly laying off around 20% of its staff, joining a lengthy list of tech firms that have started to trim their workforces since last year.
Why it matters: Deep-pocketed tech titans such as Tencent and Alibaba, which are generally less vulnerable to small market fluctuations, have largely maintained their headcount until recently. The two giants have not been immune to China’s ongoing economic downturn, regulatory curbs, and international trade tensions.
- Tencent’s rival Alibaba is reportedly slashing around 30% of its employees amid a market downturn.
Details: Tencent began downsizing its team at the end of last year, Chinese media outlet 36kr reported on Tuesday, citing people with knowledge of the matter.
- 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.
- Sources told 36Kr that 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, a management figure in the group told 36Kr. 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.
- The remaining CSIG employees will face more pressure as the company aims for profitability for the Group this year.
- Job cuts in PCG are near 10% now and continue to grow, several PCG employees told the outlet.
- CSIG, PCG, and IEG are the three largest business groups within Tencent, each group employs around 20,000 people. The Corporate Development Group, Technology Engineering Group, and Weixin Group – smaller groups with less than 10,000 employees – remain relatively unscathed amid the workforce adjustment.
Context: Job prospects look grim in the Chinese tech sector as top tech firms ranging from ByteDance to Baidu, iQiyi and Kuaishou have slashed their headcounts since last year. Online education and fintech, two areas under harsh government scrutiny, are the worst-hit areas.