Shares of Alibaba Group Holding Ltd – ADR (NYSE: BABA) move up 1.10% in pre trading session on Tuesday as Daraz Group, an Alibaba-owned e-commerce platform, is reducing its workforce in the Indian subcontinent by 11% due to ‘current market reality,’ according to Chief Executive Officer Bjarke Mikkelsen, implying 300 job losses.
According to Daraz, the layoffs will affect 3,000 full-time regional employees. The reasons for the cuts included a difficult market environment, the Ukraine crisis, supply chain disruptions, soaring inflation, higher taxes, and fewer government subsidies, according to Mikkelsen’s letter to employees, which was also published on the company’s website on Monday.
According to Mikkelsen, the group’s largest markets are Pakistan and Bangladesh. It is also present in Sri Lanka and Nepal. “Both Bangladesh and Pakistan have a similar number of staff impacted because both have similar market sizes,” Mikkelsen said, indicating that each of these countries would face 100 layoffs.
“Our headcount in Pakistan was 1,300, of which 11% were laid off,” Ehsan Saya, managing director of Daraz Pakistan, told Reuters.
Daraz, Pakistan’s largest e-commerce retail platform, was founded in 2012 and was purchased by Chinese conglomerate Alibaba in 2018. It has 100,000 small and medium-sized businesses on its platform in Pakistan. According to Mikkelsen, the company will now refocus on its core e-commerce business, streamline operations, and increase product innovation and automation.
He told Reuters that there would be no hiring freeze, particularly in areas of sustainable growth: “If this necessitates new hires for certain functions, we will proceed with them.” Daraz plans to “digitize as many retailers as possible,” he says. Alibaba made no immediate comment on the job cuts or its investment in Daraz.
Daraz now has more than 15 million active shoppers, up from 3 million in 2018, according to Mikkelsen’s letter. Daraz stated that it would have 500 million customers by 2021 with a team of 10,000 employees. Over the last two years, it has invested $100 million in Pakistan and Bangladesh.
