Tokopedia may lay off a whopping 9% of its workforce

Consumer Staples Author: EqualOcean News, ChenZhiheng Jun 18, 2024 01:44 PM (GMT+8)

ByteDance Ltd. has made its first layoffs since merging TikTok Shop with local rival Tokopedia in January this year, laying off about 450 employees at its Indonesian e-commerce unit, Bloomberg reported. The layoffs, which account for about 9 percent of the division's total workforce, will begin as early as this month, according to people familiar with the matter.

PT GoTo Gojek Tokopedia Tbk (GOTO) technical department publicly responded to the termination of up to 70% of its employees from June 2024 (PHK), and GOTO is confident that its subsidiaries will make the best decision. The Company Secretary stated that considering that GOTO is a holding company, the company believes that PT Tokopedia will continue to review the efficiency of its organization (as well as that of other companies), and that all decisions made by Tokopedia will be fully determined by Tokopedia's management.GOTO believes that Tokopedia's management will be able to consider the various evaluations to be made by focusing on the principles of prudence associated with the GOTO believes that Tokopedia management will be able to make decisions by considering various assessments and by focusing on prudent principles relating to the management of business activities to ensure the best possible outcome for Tokopedia and all stakeholders.

ByteDance is said to be preparing to lay off 450 employees at the combined Tokopedia and TikTok Shop, with the layoffs to be executed later this month. The number of laid-off employees is still subject to change. According to company information, the merger with TikTok Shop brings the number of Tokopedia employees to 5,000, which means that about 9 percent of the workforce will be laid off.

The layoffs indicate that the Chinese social media giant is overhauling its Indonesian e-commerce business, seeking to cut costs after merging TikTok Shop with GoTo Group's Tokopedia for $1.5 billion.

Indonesia, one of the earliest markets for ByteHopper's e-commerce ambitions and by far the largest, is highly competitive as Indonesian rivals include Sea Ltd.'s Shopee and Alibaba Group Holding Ltd.'s Lazada.ByteHopper is laying off employees from its e-commerce team, which includes advertising and operations, partly to eliminate duplicate functions.

The unusual agreement makes GoTo a passive supporter of the combined e-commerce business, allowing ByteDance to restart its Indonesian operations and comply with regulations put in place to halt its online retail services. Indonesia first introduced these regulations to protect its local e-commerce services and small businesses from large foreign companies.

ByteDance joins Chinese tech giants such as Alibaba and Tencent in streamlining their operations and consolidating profitability during the economic slowdown, which has seen those companies collectively lay off at least tens of thousands of employees over the past two years. ByteDance's TikTok, which faces divestment or banning laws in the U.S., also fired hundreds of employees from its marketing and operations teams globally last month as part of a larger overhaul by the company's Chinese owners, according to people familiar with the matter.