Days after its IPO plan was confirmed, Alibaba Cloud started a round of layoffs that could cut about 7% of its workforce.

On Maimai, an anonymous workplace social platform in China, some claim-to-be Alibaba Cloud employees said that the layoffs, which starts on Tuesday, will affect about 7% of the personnel.

Citing sources from Alibaba Cloud, 21jingji.com, a Chinese financial news outlet, said this was an annual optimization and streamlining work carried out by the department, rather than layoffs. 7% of people will be let go, sources confirmed.

Last Thursday, Alibaba reported earnings for the quarter ended March 31, 2023, with revenue of 208.2 billion yuan ($29.6 billion), up 2% from a year earlier but well below expectations for 210.2 billion yuan.

The cloud intelligence group, consisting of Alibaba Cloud and DingTalk, posted revenue of 18.58 billion yuan, down 2% year-over-year.  

In a press release on the earnings, Alibaba Chairman and CEO Daniel Zhang confirmed the plan for an IPO for the cloud computing unit.

“We are pleased to announce that our board has approved a full spinoff of the Cloud Intelligence Group via a stock dividend distribution to shareholders, with the intention for it to become an independent publicly listed company,” said the CEO.

As cloud spending in China slowed, cloud providers are racing to spur the demand. Alibaba Cloud began a large-scale price cut on its infrastructure services in late April. Recently, Tencent Cloud also announced a price cut for many of its cloud services.

According to a recent report from IDC, China's public cloud market, which mainly considers infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS), experienced a 19.0% year-on-year growth in the second half of 2022. This represents a significant deceleration compared to the 42.9% growth rate during the same period in the previous year.