Tencent to Continue Layoffs in Second Half Year, Sources Say

Chinese Internet giant Tencent will continue to cut staff numbers in the second half of this year, 36Kr reported Thursday, citing sources familiar with the matter. Tencent declined to comment.

Tencent‘s overall organizational optimization is formulated by the company, but each business group (BG) would differentiate on this matter. Among Tencent‘s major business groups, CSIG (Cloud & Smart Industries Group) and PCG (Platform & Content Group) are the “hardest hit areas” for layoffs in the first half of the year due to their large staff base. The overall layoff ratio of PCG may exceed 10%.

For its other business groups, IEG (Interactive Entertainment Group), CDG (Corporate Development Group), TEG (Technology Engineering Group) and WXG (WeiXin Group) all have business teams that have reduced head count by about 10% between March and June of this year. Among them, IEG’s recent layoffs were most obvious.

36Kr learned that in the second half of the year, the above-mentioned BGs will continue to lay off employees. Several business segments under PCG will see layoffs reach as much as 40%-50%, while a few other business units are facing abolishment entirely. Some other BG teams are about to perform their own optimization.

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The layoff plan was formulated by the human resources department after incorporating feedback from various sources. After receiving the layoff plan, the department head (usually GM staff) would assign the layoff ratio to the direct subordinate (usually the director level staff), and then the director would formulate a specific layoff list. In some cases, the layoff ratio set by GM staff, the team where a director is located is abolished as a whole, and the business is cut off as a whole.

According to the report, Tencent executives are not satisfied with the implementation of layoffs in the first half of the year, and think that the expected cost optimization target has not been achieved. “In the first half of the year, grassroots employees were mainly laid off, while grassroots to middle managers and senior employees were affected less.” Layoffs in the second half of the year are reportedly to start from within the ranks of management this time.