A new trend in the world is a huge reduction in employment, with numerous top corporations cutting thousands of jobs globally. The world economy is considered to be entering a recession, thus businesses like Google, Microsoft, IBM, and Amazon previously announced thousands of layoffs to reduce costs and prepare for harder economic conditions.
The next to join the club is the massive German enterprise software giant SAP, which has announced plans to eliminate up to 3,000 positions, or around 2.5% of its global staff, while strengthening its core business.
CEO Christian Klein stated, “We are further concentrating our portfolio in areas where we are strongest to maintain our quick growth. This prompted us to announce that, in a few key sectors of the business, we intend to carry out a very targeted reorganization, Klein continued.
SAP aims to reduce expenses and concentrate on its cloud business.
Additionally, the corporation is pushing for the sale of the remainder of its shares in the experience management company Qualtrics, which it acquired in 2018 for $8 billion and floated in 2021 at a valuation of roughly $21 billion. Additionally, according to reports, the business has appointed Morgan Stanley as its financial advisor for the potential sale.
The corporation is searching for a reorganization plan to bolster its core business and boost productivity. According to reports, SAP employs about 120,000 people worldwide, so even firing workers won’t be simple for the business. According to sources, the corporation will lose between $358 million and $429 million as a result of the employment losses.
However, after taking the action, the corporation anticipates an improvement in operating earnings of 10% to 13% this year. Additionally, it is anticipated to result in savings of $326 million to $380 million per year by 2024. More than 200 workers from the company’s German headquarters will be let go. The layoffs follow SAP’s fourth-quarter cloud business revenue gain of 30%, which was boosted by robust software demand.
After being questioned by the media, the company’s chief financial officer stated, “We foresee only a minor cost-saving impact for 2023, and a more pronounced one in 2024, roughly 300 million to 350 million Euros.”
SAP, which provides both traditional software and cloud-based computing services, became the biggest computer major to announce massive layoffs during the call, amid widespread job losses in the technology sector.
