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SAP to offer buyouts and job changes for 8,000 employees

By Nithya Bose in Business News, posted January 25, 2024

SAP said it will offer voluntary buyouts or enable job changes for 8,000 staff as part of its restructuring plan in 2024.

The German software giant wants its headcount to remain the same at year's end.

SAP had around 108,000 full-time employees at the end of 2023, so the downsizing will hit over seven percent of its global workforce.

The company aims for faster growth driven by artificial intelligence and reported a five percent year-over-year revenue increase in the fourth quarter.

SAP had a remarkable 50 percent stock performance in 2023, outperforming the Nasdaq Composite index's 43 percent rise.

However, the move responds to challenges posed by higher interest rates and economic uncertainties affecting tech spending, a trend that began in late 2022.

The layoff trend continues into 2024, with major companies like Alphabet and Amazon announcing job losses this month.

SAP's restructuring aims to position the company for sustained growth.

CEO Christian Klein steers towards a more cloud-centric approach, aligning with industry shifts witnessed at Adobe, Microsoft, and Oracle.

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Klein, who assumed the role of sole CEO in 2020, has been working on making SAP more adaptable to evolving industry dynamics.

Approximately 44 percent of SAP's fourth-quarter revenue, totaling €8.47 billion, came from cloud services.

It marked a major increase from 25 percent in 2019, surpassing analyst expectations of €8.33 billion.

The company now expects a 2025 adjusted operating profit of €10 billion ($10.85 billion).

It reflects a €2 billion reduction due to share-based compensation and a €500 million increase from planned efficiencies resulting from the restructuring.

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