Reeling under the impact of the Covid-19 pandemic, reporting poor performance and strict regulations have forced Tencent to fire a chunk of its employees from the fintech and gaming departments.
Tencent Holding has its HQ in Shenzhen. The Interactive Entertainment Group (IEG) which has a profitable gaming department is laying off its employees.
An insider source at IEG said that the main reason for the layoffs was the new government’s decision to freeze all approvals for the latest games. This left many employed in-game distributors without work.
Although the government resumed approvals for games, major players like Netease and Tencent were absent from the list of approved titles.
The fintech division of Tencent includes online transactions and cloud computing. Sources state that the lowering of workloads due to the pandemic is the reason for the layoffs.
Tencent started this series of lay-offs in March and started by firing around eight of the employees in its Platform and Content Group (PCG) due to poor revenues from advertising.
Sources close to the company predict that at least 15% of the employees at its PCG would be fired. It will become increasingly difficult for Tencent to raise revenue from advertising this year due to the local effect of the pandemic.
The company is witnessing the slowest growth rate since its IPO and reported a 51% drop in net profits for shareholders when compared to last year. Tencent blamed the lacklustre performance on strict policies by Beijing and the surge in covid cases.