Starting on August 15, Tencent, the most valuable company in China, will stop providing free meals to its contract employees.
Since its revenue growth stalled in the first quarter, the internet giant, which has historically been known for its generous employee benefits, has been cutting costs.
According to two such employees who received that internal notice, Tencent Holdings, China’s most valuable company, will discontinue providing free breakfast and dinner benefits to its contract employees as part of efforts to reduce costs.
According to the two employees, who both declined to be identified because they are not authorised to speak to the media, those employees, who are contracted by outside companies to work at Tencent for a predetermined time period and a set amount of money, were informed that they will have to start paying for meals starting on August 15.
Tencent, based in Shenzhen, which operates the largest video game industry in the world by revenue and China’s largest social media platform through the multifunctional super app WeChat, did not respond to a request for comment right away on Thursday.
It is typical.
It is common practice for technology companies in China to outsource certain projects, such as testing software, to contract personnel who are not entitled to receive the same benefits as regular employees on a company’s payroll.
Since 2017, Tencent’s office canteens have provided both regular and contract workers with free breakfast. The free dinner benefit was introduced in October of last year, according to the business, which had 116,200 employees as of the end of March.
On the mainland, generous benefits like free meals have helped Big Tech companies become more desirable places to work than other businesses.
Following its disappointing first-quarter financial results, which showed almost zero revenue growth due to regulatory uncertainty and economic headwinds, Tencent’s most recent move reflects how the company is keen to cut expenses wherever it can.
As most companies in the most recent quarterly earnings season are anticipated to post strong results or a turnaround in outlook, shares of Tencent in Hong Kong increased 3.11 percent to HK$312 on Thursday.
Tencent has already started laying off employees across several business units because it has been waiting for about 14 months to get a licence for a new video game. The company’s most recent round of layoffs should be disclosed in its second-quarter results, which will be made public on August 17.
Tencent changed its salary policy earlier in June to slow the rate of pay increases. According to a company internal memo, workers are no longer entitled to a “immediate” pay raise following a promotion.
In order to reduce headcount, Tencent president Martin Lau Chi-ping stated in March that the company would exit or streamline some noncore businesses. Pony Ma Huateng, the company’s founder, chairman, and CEO, reaffirmed this strategy during the company’s earnings call in May.