Tencent Fires 5500 Employees: 1st Layoff Decision In 10 Years
Chinese giant Tencent announced layoffs for the first time in a decade, having fired nearly 5,500 employees.
This comes after it reported its first quarterly workforce decline in nearly a decade.
It had become the first Asian tech company to surpass a market valuation of $500 billion in 2018.
Since then it has grown to become China’s most valuable publicly traded company and, as of February 2022, the tenth-most valuable company globally.
However, its valuation plummeted just as it approached US$1 trillion in January 2021.
As of June 2022, Tencent had lost about half of its market value since its peak.
Quarterly revenue drops
It reported 110,715 employees at the end of June, a 4.7% decrease from the end of March and the first staff reduction since 2014.
After reporting that its quarterly revenue fell short of expectations, Tencent disclosed the net reduction.
It is one among many of the biggest technology companies in China that have reduced hiring after a long period of unrestrained growth and a recent rise in the government’s interference.
There are economic factors as well, such as rising inflation, material costs, and political tensions which have prompted companies to rein in spending.
During the June quarter, Alibaba Group Holding Ltd. shed 9,000 jobs, while Amazon.com Inc. shed 100,000 jobs.
In Alibaba’s case, it suffered its first quarterly revenue decline in company history and the layoffs are a part of its cost-cutting initiatives in light of the weakening economy.
Its overall employee count fell to about 2,45,700 as a result of these layoffs.
Crisis in China
Tencent is also in the middle of a growing consumer crisis in home base China which is the result of a downturn in the real estate market and sporadic Covid lockdowns from Shanghai to Shenzhen.
Advertising, cloud computing and gaming industries are all suffering due to uncertainties.
A broad government crackdown wiped out their combined market value by more than $1 trillion in 2021.
This has led Chinese tech companies like Tencent to place more emphasis on profitability than on the market expansion of the past.
Outside China, top businesses like Twitter, TikTok, Shopify, Netflix, and Coinbase have either announced layoff plans or have frozen hiring.
Google CEO Sundar Pichai complained that his company was bloated in terms of employees.
Although the number of employees are high, there is no proportionate increase in work being done.
Pichai told staff members to increase productivity and submit suggestions for “better results faster.”
“There are real concerns that our overall productivity is not where it needs to be for the headcount we have”, he said.
Apple fired some of its employees recently in order to cut costs.
It reportedly laid off 100 contract-based recruiters who were in charge of recruiting new employees.