After ‘strategic shift’ and downsizing, UCWeb Indonesia axed half of its content operation team

Work arrangements in the tech industry can be volatile

Work arrangements in the tech industry can be volatile, and for at least a dozen people working for Alibaba-backed browser and content aggregator UCWeb Indonesia the past two months have been a rollercoaster ride.

UCWeb has terminated contracts of twelve people working on its content business in Indonesia, which means it axed almost half of the 30 people remaining on this team. This came after a period of gradual downsizing.

At its peak, the team contributing to UCWeb’s content business was almost 100 people strong. Former employees told KrASIA that they had been observing several changes in the past six months, including a decrease in the number of team members, changes in leadership roles and in work strategies. “The company did not get replacements for anyone who resigned. Before this round of layoffs, several employees whose contracts expired were also dismissed without replacement,” they told KrASIA.

From the remaining employees, most still had some months to go on their work contracts and the termination took them by surprise. The affected employees say they had been told this was due to a ‘strategic business shift’ and not based on their performance.

UCWeb has been operating in Indonesia as a mobile browser since 2015. In 2017, it said it had earmarked US$30 million to build out a content business in Indonesia and India, with hopes to monetize this further down the line. The firm is a part of Alibaba’s Digital Media and Entertainment Group.

While the writing was on the wall, what makes matters worse for the employees affected by this last round of cuts is that UCWeb is now refusing to take responsibility for the compensation they think is still owed to them under Indonesian labour law. They have called on the Indonesian manpower department to help mediate.

The unraveling at UCWeb might be part of a larger cooling off-trend in the content aggregator business in Indonesia, as another app, Kubik, also recently shut down.

Third-party contractor

The situation at UCWeb is complicated and will take some time to resolve because UCWeb hires its Indonesian employees through a third party contractor, a local outsourcing firm called CAD Solusindo. All employees have their employment contract with CAD but work in UCWeb’s office in Jakarta. From here, they were supporting UCWeb’s daily operations and reported to the firm’s executives in China. The content operations team is mainly responsible for curating video content and articles, monitoring site traffic, as well as maintaining regular and seasonal campaigns within the UC Browser and UC News platform.

As a telecommunication contractor, CAD Solusindo’s services cover all aspects of engineering, system integration, material supply, as well as providing manpower for the telecommunications industry. Besides UCWeb, the company’s portfolio also includes Chinese telco giants Huawei and ZTE.

It was CAD Solusindo who handed the twelve affected employees the termination agreements on December 20th. This agreement did include the payment of annual bonuses, the regular salary for January, and an extra IDR 3 million (US$ 213) compensation. But under Indonesian labour law, if one party unilaterally terminates a work contract before the expiration of the agreed-upon contract period, the party ending the contract is obliged to pay salaries for the remaining time of the work contract. The agreement also contained clauses that the employees felt strong-armed them into accepting the deal without any room for negotiation.

“We feel that there are irregularities in this termination, so we refused to sign the termination agreement,” Rizky Fadlulloh, one of the affected employees told KrASIA. “We assume there are legal issues in the joint work contract made between CAD Solusindo and UCWeb in Indonesia.”

CAD Solusindo told KrASIA that it is responsible for the termination of the contacts, but refused to give further details regarding the work arrangement between itself and UCWeb Indonesia. “We need to reiterate that these twelve people were CAD Solusindo’s contract employees, and all disagreements that occur are purely internal problems between CAD Solusindo and related staff,” said CAD’s legal counsel, Mega Widiaswara.

UCWeb Indonesia declined to comment. The mediation between all parties and the manpower department in Jakarta is ongoing. “We are determined to solve it as best we can in accordance with the prevailing legal corridors in Indonesia,” Mega told KrASIA.

UCWeb’s global PR representative, Michael Hu, denied an overall downsizing of the company, emphasizing that its presence in Indonesia will continue to be strengthened. “The Indonesian market is a crucial part of UCWeb’s overseas roadmap,” he said. “We are firmly investing in product and service innovations in Indonesia.”

A slowdown in the content aggregation business?

With 83.9 million mobile internet users in 2018, Indonesia is a hot market for digital media distribution which prompted the emergence of several news aggregator apps the past few years. For many, the content aggregator is seen as effective and efficient to simplify the search for news and information. In China, content aggregator Toutiao has helped propel parent company ByteDance to its current status as the “most valuable startup in the world“.

In Indonesia, besides Alibaba’s UCWeb, there are other news apps with roots in China. For instance, there is Bytedance-backed BaBe and Bertelsmann Asia Investment-backed Baca. Line, the messaging app from Japan, also has a localised content business here. While we don’t have direct insight into their current operations, there are no signs of downsizing or business shifts here.

But it’s possible that there’s an overall slowdown in this sector ahead. Kubik News from Innotech Asia, a subsidiary of Qutoutiao, a Chinese mobile content aggregator platform that started its operations in Indonesia in September last year ended up shutting down its entire operation, laying off at least 25 employees after only five months.

Kubik News attracted users to read on its app by giving out points for each article that can be exchanged for phone credits. The more articles you read, the more points you collected.

A former Kubik employee told KrASIA that Kubik News’ failure was caused by the wrong business strategy. Moreover, the former employee said, their executives at Qutoutiao claimed that the content business in China is experiencing a slowdown at the moment, which affected its business in Indonesia. What was previously a news aggregation app, Kubik currently only contains a collection of games and videos that are posted automatically. “Kubik News operations have stopped completely, so all the content is now controlled by a machine,” the former employee said.

There was no news of dispute between Kubik News and its former employees, but the company has closed completely without notice of new product plans in Indonesia.

Editor: Nadine Freischlad

Disclaimer: The author of this article was an employee of UCWeb Indonesia until June 2018. She ended her contract voluntarily.