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Alibaba's cloud computing unit is undergoing a round of downsizing in a bid to cut costs ahead of its initial public offering.
According to a source close to the matter, Alibaba's cloud computing unit will lay off 7% of its staff. This decision includes a voluntary redundancy plan for many of its employees.
Alibaba is a Chinese giant that has submitted listing and fundraising plans for some of its business units, including Cainiao, its logistics unit. As part of those plans, China's biggest cloud computing service is expected to go public next year. Unfortunately, this initial public offering could hurt many company employees.
According to reports, this dismissal round started because of Alibaba's cloud computing unit's need to cut costs. In the last quarter, Alibaba's cloud computing division saw a year-on-year decline of 2% with revenue of 18,6 billion yuan (US$2,69 billion, R$13,3 billion).
But how will the layoff affect employees?
Although the mass dismissal of Alibaba's cloud computing unit can be beneficial to the company, and likely is necessary, it will have a devastating effect on the employees who are laid off. Dismissal will not only affect the professional status of employees, but also their financial and emotional stability.
Alibaba's role
Unfortunately, Alibaba has not released the details of its voluntary redundancy plan, but the company needs to ensure that these employees have all the help they need to find new jobs and explore new opportunities. Alibaba managers need to help prepare employees for recruitment processes and, if possible, offer financial assistance to employees who have been laid off.
