China’s ecommerce giant Alibaba laid off around 10,000 employees during the quarter ended June 2022 as part of its efforts to cut costs. The company decreased its workforce by 4,375 in the first three months of 2022. The reduction in headcount is the result of intensified attempts by Alibaba to reduce costs and increase efficiency owing to the ongoing regulatory pressure, subdued consumption, and a sluggish economy in China. According to GlobalData, Alibaba had 1,707 active jobs in July 2022. For the period January 2022–July 2022, the company reported an 85% decrease in the number of active jobs.
Revenue Growth Remains Flat
The top ecommerce company in China failed to report sales growth for the first time since going public in 2014. The company’s revenue stood at CNY205.56 billion ($30.43 billion) for the quarter ended June 2022, which indicated a decrease of 0.1% YoY. Although the decline was marginal, it was of considerable significance as Alibaba has long been one of the fastest-growing technology companies in China. For the April–June quarter of 2022, the company recorded a net income of CNY22.74 billion ($3.4 billion), which reflected a decrease of 49.6% YoY.
China’s Strict COVID-19 Lockdown
China’s economy posted its worst growth in more than two years during the April–June quarter of 2022 as a result of the continued adherence to its zero-tolerance policy in combating the COVID-19 pandemic. Alibaba attributed the decline in revenue to the outbreak of the pandemic in China. The company claimed that in April and May 2022, pandemic-related supply chain and logistical bottlenecks affected its core domestic ecommerce business.
Global Tech Layoffs
The layoffs at Alibaba come at a time when a number of tech companies globally announced plans to reduce the workforce and limit spending due to increasing inflation and interest rates, and fears of an impending recession. Major companies in the US such as Apple Inc., Alphabet Inc., and Meta Platforms Inc. reduced hiring, while Alibaba’s closest competitor, Amazon.com Inc., cut down 100,000 jobs. In July 2022, ecommerce company Shopify Inc. laid off 10% of its global workforce due to a slowdown in growth.
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