Europe’s largest software manufacturer wants to cut jobs worldwide. At first there was talk of 8,000 jobs – now more employees are to go. But there are new jobs in the field of artificial intelligence.
Europe’s largest software manufacturer SAP is expanding its job cuts program due to high demand from employees. Instead of 8,000 jobs, 9,000 to 10,000 jobs are now to be cut, the Walldorf-based company announced on Tuesday night. At the end of the second quarter, there were 105,315 jobs – almost 3,000 fewer than at the end of the first quarter.
Reduction announced at the beginning of the year
The majority of the affected employees should also leave SAP, while the rest can continue their training or apply for other positions, according to the company. It had already been indicated that the severance pay and early retirement programs were well received by employees. Older employees are usually eligible for this, as they tend to receive higher salaries. Younger employees mean lower salary costs on average.
The company had already announced the cuts in January, justifying them primarily with the need for new jobs that would deal in particular with artificial intelligence. “With the planned transformation program, we are increasingly shifting investments to strategic growth areas, primarily in AI,” CEO Christian Klein said at the time. “This will enable us to continue to develop groundbreaking innovations in the future and at the same time improve the efficiency of our business processes.”
Klein: Accelerated sales growth until 2027
Klein now reiterated that SAP is continuing to invest in its goal of becoming the leading provider of enterprise AI. “Based on our progress and strong order pipeline, we are confident of achieving accelerated revenue growth by 2027.”
Despite the cuts, the company expects to have a similar number of employees at the end of this year as at the beginning of 107,602 full-time positions, because the software giant also wants to continue hiring new people. Chief Financial Officer Dominik Asam said in a conference call that hiring is likely to increase in the second half of the year.
Second quarter surprisingly good
Because job cuts are progressing faster than expected and many new hires are only scheduled for the second half of the year, operating profits were unexpectedly good in the months April to June. In the second quarter, they grew by a third year-on-year to 1.94 billion euros. Analysts had expected an increase of 24 percent. Sales climbed by 10 percent to 8.29 billion euros. The cloud business in particular continued to set the pace, with growth of 25 percent.
Net profit fell significantly in the second quarter by 69 percent to 918 million euros. This was due in particular to the billion-euro special income from the sale of the former US subsidiary Qualtrics a year earlier, but also to the additional provisions for the increased job cuts.
Shares on record course
The share price shot up to a record high following the announcements. SAP shares rose by a good six percent to EUR 194.84 shortly after trading began on Tuesday. Like other tech stocks, the shares have been benefiting from the megatrend of artificial intelligence for some time now. So far this year alone, they have risen by around 40 percent.
In terms of market capitalization, SAP has long been the undisputed number one in the DAX. With a market capitalization of almost 240 billion euros, the company is well ahead of number two Siemens, which has a market value of around 140 billion euros.
Source: Stern
