(Yicai Global) May 24 -- Alibaba Group Holding’s cloud computing arm is reportedly downsizing its staff numbers, a week after the Chinese internet behemoth announced a plan to spin off the business for a stock market listing.

Alibaba adjusts its headcount every year, and this time an adjustment of about 7 percent of Cloud Intelligence Group's staff began this month after year-end bonuses were paid in late April, The Paper reported, citing an insider. Any remaining annual leave and seven-day family care leave will be compensated, the person added.

In the biggest organizational shakeup since Alibaba was founded 24 years ago, the Hangzhou-based company announced on March 28 that it had divided itself into six business groups, saying each would independently raise funds and go public at a suitable time. It announced the planned spin off of its cloud computing, logistics, and grocery arms on May 18.

Alibaba plans to spin out Cloud Intelligence and complete its initial public offering in the next 12 months to further sharpen its business strategy and optimize operations and governance, Daniel Zhang, chairman and chief executive of Alibaba, wrote in a recent open letter. 

Cloud Intelligence runs cloud computing services provider AliCloud and intelligent working platform DingTalk and some of its earlier initiatives include ChatGPT-like Tongyi Qianwen, which can summarize meeting notes and write emails. The unit has also cut prices and hiked partner commissions lately to revitalize its business.

Cloud Intelligence’s first-quarter revenue fell 2 percent to CNY18.6 billion (USD2.6 billion) from a year ago, partly due to the loss of a top client. AliCloud’s market share shrank to 31.9 percent from 36.7 percent, still ranking No. 1 in China in the infrastructure-as-a-service and platform-as-a-service sectors, according to International Data Corporation.

Cloud Intelligence is readying for the artificial intelligence age. The emergence and the broad application of AI, large language models, and vertical models have raised new requirements for computing power, presenting a huge first-mover advantage for AliCloud, Zhang said. The unit sees opportunities in building its model-as-a-service business on top of the IaaS and PaaS frameworks, he added.

Editor: Emmi Laine, Xiao Yi