Christian Klein, CEO of the software company SAP, stands on the podium looking at his cell phone before the start of the company’s Annual General Meeting.
Uwe Anspach | Picture Alliance | Getty Images
SAP announced on Tuesday that it plans to offer voluntary buyouts or facilitate job changes for up to 8,000 employees as part of a restructuring program for 2024.
The German software company stated in a press release that its headcount should remain the same at year end. SAP had about 108,000 full-time employees at the end of 2023, which means that the restructuring will impact over 7% of the workforce.
Following this news, SAP shares surged about 5% in extended trading, adding to last year’s impressive 50% gain, the best performance since 2012, amidst a 43% rise in the Nasdaq Composite index.
SAP is looking to revamp itself for faster growth, partly driven by artificial intelligence, after seeing a 5% increase in revenue year over year in the fourth quarter. Amidst concerns about the economy and higher interest rates affecting tech spending, layoffs have become a common trend across the industry, starting back in late 2022. SAP had previously announced its decision to eliminate 3,000 roles a year ago.
This downsizing trend has persisted into 2024, with other companies like Alphabet and Amazon also announcing layoffs this month.
SAP has adjusted its 2025 outlook, now expecting 10 billion euros ($10.85 billion) in adjusted operating profit. Although this is down 2 billion euros from its previous outlook due to share-based compensation, it’s also up by 500 million euros due to planned efficiencies from the restructuring.
CEO Christian Klein has been focused on making SAP more cloud-centric, following similar transitions at Adobe, Microsoft, and Oracle. Around 44% of SAP’s fourth-quarter revenue, totaling 8.47 billion euros, came from cloud services, up from 25% in 2019, exceeding the consensus of 8.33 billion euros among analysts polled by LSEG.
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