Recently, Alibaba has announced a hiring freeze for the remainder of the 2015 fiscal year in an effort to achieve business efficiency.
This shocking declaration came into news last week when Alibaba’s CEO, Jack Ma, expressed that the e-commerce giant has grown far too quickly. He believes that Alibaba should slow its growth and focus on streamlining its various business segments and reformulate its strategy in hopes of eventually being able to directly compete with the likes of Amazon and E-Bay. As such, Alibaba will no longer be hiring this year unless it is to replace key employees who chose to leave the company.
Despite the intention of Ma’s decision, many feel this move may be unnecessary. Although the company’s annual revenue has been reported to have slowed down in the most recent fiscal year to 2.3 trillion Yuan ($1 USD=6.20 Yuan), the company still possesses more overall online commerce sales than both Amazon and E-Bay combined. However, while the company has been expanding rapidly with it showing a 63% increase in the total numbers of workers to 34,081 compared to the numbers in 2014 and its gross merchandise volume has increased 49% to 787 billion, the fact is it is losing its business efficiency as demonstrated by the decline in its revenue. To amend this inefficiency, Ma declared that until sales exceed $1.6 trillion USD, he will keep employee count below 50,000.
Overall, I feel that while decision will help endorse Alibaba’s business efficiency in the short run, if it stills want to maintain its growth momentum, it must start hiring in the near future. Currently, Amazon has more than 154,100 workers and E-Bay 32,700 workers, despite both generate much less sales than the China based E-Commerce does. In order for Alibaba to compete with these other online retailers, especially internationally, it has to start hiring to match them at least on an operating scale.