Alibaba Laid off 19,000 Employees As A Cost-Cutting Measure In The Covid Challenged Economy

Alibaba Group Holdings has cut down the workforce by 19000 employees last year as the company experienced a global economic crisis and diverted the focus to saving costs.

Alibaba Holdings, the Hangzhou-based online retailer platform, laid off more than 4000 workers in the final quarter of the last year. The information has been shared by the data in the earnings report. The company has undergone a massive reduction in its workforce last summer when the company first observed reductions in its revenue.

Alibaba Holding’s growth has been drastically reduced by the global macroeconomic conditions and China’s strict zero covid policy as the lockdowns has cut off consumer spending.

The company has stated that it will undergo initiatives to opt for a more disciplined approach to cut down on spending and scale back the expenses in the segments that are generating long-term value.
The shift has been in alignment with Beijing’s incentives, and it marks a change from the aggressive market situation that characterized the e-commerce platform in the past.

Alibaba is still on the list of China’s biggest private-sector companies, with a workforce of 239;740 individuals.
The company has reported sales and profits that have exceeded the expectations of the analysts, and the shares have continued to increase as it responds. However, on the contrary, the job reductions in the company increased in December from September. They have stated that the company has been adjusting the workforce to align with the nation’s economy.

Alibaba Holdings reported better than the expected total quarterly revenue on Thursday. The growth has been contributed to its efforts of reducing costs and China’s relaxation of the Covid-19 policy.

The economic platform and the largest e-commerce in China have tolerated the crises caused by the covid-19 policy, and the restrictions were uplifted in December.

The revenue of the holdings has increased by 2 percent to 247.76 billion yuan (35.92 billion USD) for the fiscal third quarter on December 31, compared with the estimate of 245.18 billion yuan sourced from the Refinitv consensus.

The ordinary shareholder’s net income has increased by 69 percent to 46.82 billion Yuan from 27.69 billion Yuan last year.

The shares of Alibaba in the U.s. have increased by 1.8 percent and have accumulated trading higher than 6 percent of the re-market trades.

China’s net retail sales declined by 1.8 percent in December, and the economy experienced one of the worst growth rates in history expanding by just 3 percent.

At the same time, Daraz Group, the Alibaba-owned e-commerce platform has reduced its workforce by 11 percent in an attempt to prepare for the present market reality.

The company has addressed the layoffs as a way to cope with a difficult market environment. The war has caused a reduction in the supply, followed by rising inflation, the removal of essential governmental subsidies, and a rise in taxes.

The Daraz group operates in Pakistan, Sri Lanka, Nepal, and Bangladesh.

The layoffs in Alibaba have been considered the first tech layoffs since 2016. The company’s chief financial officer, toby Xu, has stated that the company is presently focused on high-quality growth, improving the efficiency of operations, and optimizing the structure of cost and the net position after the company revealed its Q2 earnings.

Alibaba’s 2022 downturn has been majorly due to the COVID lockdowns in China, which have hampered the company’s ability to operate. Chinese authorities have been reducing their dependence on tech companies as the US government has threatened to delist them from the New York Stock Exchange.

Present Balance Sheet of Alibaba Holdings:

The total debt for Alibaba Group Holding Limited was 161.4 billion Chinese Yuan, an increase from 151.8 billion Chinese Yuan a year earlier. However, the business has CNY487.1 billion in cash on hand to pay off the debt. It suggests that the company has net cash of 325.7 billion Chinese Yuan.

The Alibaba Group’s balance sheet shows that it has liabilities totaling 382.9 billion Chinese Yuan that must be paid off within a year. The business has cash deposits totaling 487.1 billion Chinese Yuan and receivables in addition to its obligations. The latter has a value of 71.2 billion Chinese Yuan, according to estimates.
Accordingly, the Alibaba Group’s total liabilities, which include cash and short-term receivables, total 81.5 billion Chinese Yuan.
1.88 trillion Chinese Yuan is the market capitalization of Alibaba Group Holding.

edited and proofread by nikita sharma