MR SHANGKONG
Mr. Shangkong
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What does BAT’s hiring freeze really mean to the entire internet industry?

Moves may give some start-up companies a moment to breathe

PUBLISHED : Sunday, 25 October, 2015, 2:36pm
UPDATED : Sunday, 25 October, 2015, 8:18pm

China’s three internet giants, Baidu, Alibaba and Tencent – often referred to collectively at BAT – are apparently thinking of the same thing: fasten your seat belt, tighten your budget and stop hiring.

Is this a good thing or bad thing for the long-term development of internet business in the world’s No2 economy?

The growing power of BAT has rapidly become a challenge to many other, smaller internet businesses in China and one of the challenges it poses related to hiring. Due to the higher pay and other compensation offered by the triumvirate, even to recently graduated junior engineers, many competitors have complained about difficulties to recruiting sufficient talent in recent years.

And due to BAT’s powerful roles in many different internet-related sectors, ranging from search to car-hailing services, some people view it as an obstacle to future development and innovation by smaller players that may have the potential to be disruptive some day, like Uber or its Chinese clone Didi Kuaidi, which have changed the way people travel.

Many start-up companies find it difficult to compete with BAT for qualified recruits

Last week, Beijing-headquartered Baidu told staff it was instituting a temporary hiring freeze due to its “current business situation”.

In April, e-commerce giant Alibaba decided to suspend recruitment for the rest of the year, with its chairman, Jack Ma Yun, saying he felt the company had grown “too quickly”.

Shenzhen-based Tencent – famous for its real-time messaging service WeChat – was also recently reported to have suspended the hiring of some outsourcing project managers and contractors.

A junior engineer working for a local, well-established telecommunications company on the mainland can make between 10,000 yuan and 20,000 yuan a month, depending on the priority and importance of the project. BAT is believed to pay far more than that, along with many extra, non-cash benefits and big bonuses.

Many start-up companies find it difficult to compete with BAT for qualified recruits, with a side effect being that many start-up apps are launched with bugs and many fancy new products fail to meet consumers’ expectations.

For the technology industry, or perhaps any business, people are always the key. The hiring freezes at BAT may give some start-up companies a moment to breathe.

All this should not come as a surprise. Way before the boom in the Chinese technology and internet sector, we saw such changes in the financial industry too.

Remember the days when the Big Four accounting firms tried to hire tens of thousands of fresh graduates annually to work on big Chinese bank listings? Those days are gone too, and our young professionals have instead chosen many different paths to realise their different dreams.

 

George Chen is the managing editor of SCMP International Edition. For more Mr. Shangkong columns: facebook.com/mrshangkong or follow @george_chen on Twitter