Alibaba-backed Asian group Daraz cuts workforce 11%

Bjarke Mikkelsen, CEO of Daraz, speaks during an interview in Islamabad
Bjarke Mikkelsen, CEO of the e-commerce retail platform Daraz, speaks with Reuters during an interview in Islamabad, Pakistan November 24, 2021. Picture taken November 24, 2021. REUTERS/Asif Shahzad

KARACHI, PAKISTAN, Feb 7 (Reuters) - Alibaba-owned e-commerce platform Daraz Group is reducing its workforce in the Indian subcontinent by 11% due to the 'current market reality', Chief Executive Officer Bjarke Mikkelsen said, suggesting job losses that could affect about 300 people.

Daraz confirmed to Reuters that the cuts will affect a base of 3,000 full-time regional employees.

A difficult market environment, the Ukraine crisis, supply chain disruptions, soaring inflation, higher taxes and fewer government subsidies were among reasons for the cuts, Mikkelsen told employees in a letter on Monday, which was also published on the company's website.

Pakistan and Bangladesh are the group's biggest markets, Mikkelsen told Reuters. It also operates in Sri Lanka and Nepal.

"Both Bangladesh and Pakistan have a similar number of staff impacted since both of them are similar in market size," Mikkelsen said, indicating there would be 100 cuts from each of these countries.

Ehsan Saya, managing director of Daraz Pakistan told Reuters: "Our headcount in Pakistan was 1,300, out of which 11% were laid off."

Daraz, Pakistan's largest e-commerce retail platform, was founded in 2012 in Pakistan and acquired by Chinese giant Alibaba (9988.HK) in 2018. It has 100,000 small and medium companies in Pakistan on its platform.

Mikkelsen said the company will now refocus on its core e-commerce business, simplify operations, and boost product innovation and automation.

He told Reuters that there would be no hiring freeze, especially in sustainable growth areas: "If this requires new hires for certain functions, we will be proceeding with them."

Daraz would be looking into "digitising as many retailers as possible", he said.

There was no immediate comment from Alibaba on the job cuts or its investment in Daraz.

Daraz has boosted its active shoppers to more than 15 million now, from 3 million in 2018, Mikkelsen said in the letter.

Reporting by Ariba Shahid; Editing by Rashmi Aich and Bernadette Baum

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Ariba Shahid is a journalist based in Karachi, Pakistan. She primarily covers economic and financial news from Pakistan, along with Karachi-centric stories. Ariba has previously worked at DealStreetAsia and Profit Magazine.