No end in sight to layoffs? Jack Ma-led tech giant Alibaba to trim huge workforce | THIS decision led to pink slips

 Chinese e-commerce major Alibaba is reportedly laying off about 7 per cent of its cloud arm’s workforce. The company has already started informing employees in this division of the downsizing. The development comes amid the Jack Ma-founded firm’s plans to launch separate Initial Public Offerings (IPOs) for its various business groups.

Alibaba is offering severance packages to its employees. It also plans on transferring some workers to other parts of its business verticals. Alibaba Group’s CEO, Daniel Zhang, had detailed the restructuring plans for the Cloud division last week.

Why the layoffs?

This comes around a month into the group’s announcement that it would split into six business groups, with each unit exploring raising funds by listing on the bourse separately. The six units will include the Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group, and Digital Media and Entertainment Group.

The decision had triggered mass layoffs in March this year, the report said. Following the development, the internet giant’s headcount dropped to just over 235,000 in that month.

Previous layoffs

During the month of August in the year 2022, Alibaba was forced to implement cost-cutting measures in response to lackluster sales and a sluggish economy within China. As a result, approximately 10,000 workers were given pink slips and let go from their positions within the company.

About Cloud division

The division was formed in 2009 and offers services to private and government organisations in more than 200 countries and regions. It also supports one of China’s leading third-party payment platform, Alipay. The cloud service provider has the third-largest market share in the sector globally, and the largest in the Asia-Pacific region.

What does this mean for Alibaba and its customers?

The layoffs are a sign of Alibaba’s struggle to cope with the changing market dynamics and regulatory pressures in China and abroad. The company has been facing scrutiny from authorities over its monopolistic practices, data security, and social responsibility. The company has also been hit by the disappearance of its founder Jack Ma from public view since late 2022.

The downsizing may affect Alibaba’s ability to compete with other cloud service providers such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). The cloud division is one of Alibaba’s fastest-growing and most profitable segments, accounting for about 10 per cent of its total revenue in the fiscal year 2022.

The customers of Alibaba Cloud may also face some disruptions or uncertainties as the company undergoes restructuring and reorganization. They may have to deal with changes in service quality, pricing, or availability. They may also have to consider alternative options if they are not satisfied with Alibaba’s cloud offerings.

Conclusion

Alibaba’s decision to lay off a significant portion of its cloud workforce is a reflection of its challenges and ambitions in the global cloud market. The company is trying to streamline its operations and focus on its core businesses while preparing for separate IPOs for its different units. However, the move may also have negative consequences for its employees, customers, and reputation.