Yahoo is pulling the plug on its China operations - a move that has led to the laying off of hundreds of employees.
On Wednesday, March 18, Yahoo disclosed that it is shutting down its office in Beijing, which served as a R&D center for the company in the region.
"We are constantly making changes to align resources, and to foster better collaboration and innovation across our business. Today we informed our employees based in Beijing that we will be closing our office there," said Yahoo in a statement.
This office was the company's only presence in mainland China and opened in 2009 in a bid to grow the company's global presence, as well as research cloud computing, search, advertising and other such personalized tools.
While Yahoo did not reveal how many employees would be laid off as a result, per the WSJ, the move is anticipated to affect nearly 200 to 300 employees.
Yahoo has disclosed that it will be "consolidating certain functions" to some of its offices, which include the company's headquarters in Sunnyvale, California.
While Yahoo has assured that employees who have been impacted by the decision will be "treated with respect and fairness through this transition," the severance package it said would depend on the duration of an employee's tenure with the company.
With Yahoo's worldwide employee strength said to be 12,500 in end-2014, the lay-off will affect 2 percent of the company's global labor strength. Recently, Yahoo has also reduced its workforce in India and Canada, laying off nearly 600 employees.
The downsizing is seen as part of the cost-cutting measures introduced by its CEO Marissa Mayer to placate investors who are asking for expense reduction. An employee has reportedly let on that the increasing labor costs in Beijing - said to be two times higher when compared to India - could have prompted the closure
The closure also comes close on the heels of the Chinese government's announcement of new stringent rules, which require tech companies that are based outside China to submit audits, hand source codes etc. The rules are slated to come into effect in March.
A strong possibility exists that the rising costs, coupled with the new government rules, may have prompted Yahoo to shut shop in Beijing.
Photo Credit: Christian Heilman | Flickr
