SAP Announces Restructuring Plan with Job Changes or Buyouts for 8,000 Employees

The German software company SAP reveals plans for voluntary buyouts or job changes affecting over 7% of its workforce (8,000 employees) as part of a restructuring program for 2024.

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SAP, the German software giant, has disclosed its intention to implement a restructuring plan in 2024, targeting voluntary buyouts or facilitating job changes for approximately 8,000 employees. The move is part of SAP’s broader efforts to reposition itself for accelerated growth, driven, in part, by investments in artificial intelligence (AI). The company aims to maintain its headcount at the same level by the end of the year, with a total of about 108,000 full-time employees as of the end of 2023.

Scope of Restructuring: SAP plans to offer voluntary buyouts or enable job changes for around 8,000 employees, representing over 7% of its workforce. The company aims to conclude the restructuring program by the end of 2024.

Headcount Management: Despite the restructuring, SAP intends to keep its overall headcount consistent by the end of the year. The restructuring measures align with SAP’s goal of adapting to changing market conditions and positioning itself for faster growth.

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Stock Performance: SAP’s shares experienced a positive response in extended trading, rising by about 5%. The stock’s robust performance in the previous year included a notable 50% increase, marking its best performance since 2012.

Revenue Growth and AI Focus: The restructuring comes after SAP reported a 5% year-over-year increase in revenue for the fourth quarter, emphasizing the company’s push for faster growth, particularly in the field of artificial intelligence (AI). CEO Christian Klein has been steering SAP toward a more cloud-centric approach, aligning with industry trends observed in companies like Adobe, Microsoft, and Oracle.

Financial Outlook: SAP has adjusted its 2025 outlook for adjusted operating profit to 10 billion euros ($10.85 billion). While this reflects a reduction of 2 billion euros due to share-based compensation, the company anticipates a positive impact of 500 million euros from planned efficiencies resulting from the restructuring.

CEO’s Cloud-Centric Strategy: CEO Christian Klein has been actively pursuing a cloud-centric strategy for SAP, emphasizing the importance of cloud services. In the fourth quarter of 2023, approximately 44% of SAP’s revenue, totaling 8.47 billion euros, originated from cloud services—a significant increase from 25% in 2019.

Market Dynamics: The tech industry has witnessed a trend of downsizing and restructuring in response to factors such as higher interest rates and economic uncertainties impacting tech spending. This aligns with broader industry movements observed since late 2022, where companies like Alphabet and Amazon have announced layoffs.

SAP’s restructuring plan, targeting voluntary buyouts or job changes for 8,000 employees, reflects the company’s strategic efforts to adapt to evolving market dynamics and position itself for sustained growth, particularly in the realm of artificial intelligence and cloud services.