(Yicai) Nov. 12 -- Online rumours that Tencent Holdings is preparing to lay off half of its employees are untrue, a person close to the Chinese technology giant told Yicai.

During a live-streamed annual event to mark the Shenzhen-based company’s 28th anniversary yesterday, its leadership signaled the need to accelerate organizational reform, including streamlining hierarchies and strengthening talent management, the person said.

Executives noted that some middle managers are reluctant to take action, while frontline staff are highly motivated. They also stressed the need to maintain a sense of urgency and proactively embrace change in the era of artificial intelligence.

Founder Pony Ma, who is also chairman and chief executive, adopted a particularly stern tone in his remarks, the source said.

Rumors also claim that during the livestream executives said “it’s already a matter of survival,” and that Tencent had “been too lenient with employees,” “not set high-enough standards,” and that “senior staff should make way for younger colleagues with relevant expertise and give them more authority.”

Management distinguished this latest initiative from the cost-cutting and efficiency drive launched a few years ago, the source said. That campaign was relatively reactive and mainly about reducing costs. This time, Tencent is proactively positioning itself for the AI era with a greater emphasis on improving efficiency and productivity, with the goal of inspiring teams to create new value, empower frontline staff to take the initiative, and make middle management flatter and more agile, the person said.

Executives also pointed out that, to adapt to the changes ahead, Tencent needs to proactively explore new approaches and business opportunities, the source said. In a reallocation of resources to adapt to the AI era, half of the workforce should focus on improving efficiency in existing core businesses, while the other half should explore AI-native opportunities and identify new growth areas, they reportedly said.

Tencent’s leadership had previously signaled that it would change its business model in the AI era, with organizational streamlining a key priority.

In an interview with Yicai and other media outlets in June, Dowson Tong, Tencent senior executive vice president and head of its Cloud and Smart Industries Group, said that teams developing AI-native products have become flatter than before and will continue to shrink in size, with development increasingly carried out by small groups of three to five people.

Liu Yi, head of Tencent’s CodeBuddy and WorkBuddy products, also said in the interview that within his team the only organizational units are groups, with no additional management layers. Such a flat structure helps eliminate inefficiencies and information distortion caused by reporting requirements and organizational barriers between employee and management levels, he added.

Editor: Kim Taylor