Tencent's founder wants half his staff moved to new AI businesses. The company says it is not a layoff

Tencent, the Chinese company behind WeChat and one of the world's biggest video game publishers, is reorganizing its workforce around AI. Its founder wants up to half of its staff working on new AI-first products, rather than on its existing businesses.

Founder and chief executive Pony Ma made the case at an internal livestream on November 11, the company's 28th anniversary. Bloomberg reported his remarks on November 12. Posts on Chinese career and social apps soon claimed Tencent would lay off half its people. The company says that is wrong.

For investors, the episode matters beyond Tencent. It is one of the clearest statements yet from a large tech company that AI should shrink the staff needed to run existing products. Tencent says the freed-up people will be redeployed, not cut. Whether that holds is the open question.

What Ma said, and what Tencent says he meant

Ma used a military comparison, according to accounts of the speech. The core businesses, such as games and social networking, are the army and must be defended. AI-first ventures are the navy. He said AI should let half a team do work that once needed everyone, freeing the other half to explore AI-native businesses, meaning products built around AI from the start.

He also said Tencent's shift was somewhat late, and that the company could no longer afford to feel secure. Chinese financial outlet Yicai reported he criticized some middle managers as reluctant to change, while describing frontline staff as motivated. He called for a flatter company where people switch skills and roles quickly.

Ma reportedly said the shift could no longer involve repeatedly persuading staff or bargaining over terms, noting that some employees wanted a management post before joining new businesses. He framed the effort as different from Tencent's cost-cutting drive of a few years ago. In 36Kr's account, he said the goal is to adapt to the new battlefield of AI, not to cut costs.

The layoff rumors spread on Maimai and Xiaohongshu, two popular Chinese apps. One version put the cuts at 8,000 jobs. Tencent public relations director Zhang Jun said the 50% figure was "merely a metaphor" for the reorganization, not a layoff target. He said no plan to cut half of employees had been announced.

A person close to the company told Yicai the rumors were untrue. That person said half of staff would focus on efficiency in the core businesses, and half on AI-native products and new growth. Some harsher remarks attributed to executives on social media, such as that Tencent had been too lenient with staff, remain unconfirmed.

The numbers behind the pressure

Tencent had 115,927 employees at the end of June, according to its second-quarter results. That was up from 111,221 a year earlier. Half of that workforce would be roughly 58,000 people, by machine.net's arithmetic, though Tencent has not said how many will move, from which units, or when.

Its spending shows where the priorities already lie. In the first half of 2026, Tencent spent 84.7 billion yuan on capital expenditure, up from 46.6 billion yuan a year earlier, according to its interim results. It spent 64.5 billion yuan on staff pay over the same six months. By machine.net's arithmetic, capital spending ran at about 1.3 times the payroll.

The AI push is also costing profit. Excluding new AI products, Tencent's adjusted operating profit rose 19% in the second quarter. Including them, growth was 9%. Free cash flow was negative 13.8 billion yuan in the quarter, after heavy capital spending and prepayments for computing capacity. Without those prepayments, Tencent said, it would have been positive 37.6 billion yuan.

Seen that way, Ma's message makes financial sense. If AI spending keeps rising faster than revenue, which grew 11% in the second quarter, the company needs more output from the same people. Startup Fortune noted that moving staff is a cheaper lever than buying more hardware.

Small teams, fewer managers

Tencent has been testing this model for months. In June, cloud chief Dowson Tong said AI product teams were getting flatter, with much work done by groups of three to five people. Liu Yi, who runs the WorkBuddy office assistant and CodeBuddy coding tool, said his team has no management layers above its working groups.

Rival Baidu is moving in the same direction. At its annual conference on November 12, chief executive Robin Li said companies have swapped in AI without redesigning how work is organized. He predicted jobs will be organized around tasks, with humans and AI software agents working together. Baidu has already merged its lower career ladders into one job-level system, 36Kr reported.

The common target is middle management. Its work of passing on information and assigning tasks is increasingly handled by software, 36Kr reported. For Western executives, Tencent offers a useful test case. It is trying to redesign its org chart for AI at scale while publicly promising this is not a downsizing.

What to watch: whether Tencent names the units receiving staff, whether headcount falls in its next quarterly reports, and whether it ties new AI products to revenue targets. Startup Fortune noted that Tencent has not said which units will receive staff, or set new product targets, alongside the speech. Until it does, the 50% figure is a goal, not a plan.