January 27, 2023: On Thursday, German business software firm SAP said it would cut up to 3,000 jobs, or nearly 2.5% of its workforce, becoming the latest tech company to declare significant layoffs.
“We are further focusing our portfolio in the places where we are strongest to continue our accelerated growth,” Christian Klein, CEO of SAP, stated in the firm’s fourth-quarter 2022 earnings call.
“This led us to declare today that we intend to carry out a very aimed restructuring in special areas of the firm that will impact up to 3,000 positions and include a headcount decrease of about 2.5%.”
SAP shares were trading more than 2% lower at 8:05 a.m. London time following the declaration.
Responding to a question on calculated cost savings from the layoffs, Luka Mucic, CFO of SAP, said the company anticipates “about 300 to 350 million euros in run-rate savings.”
“We are guiding to double-digit profit development in 2023 as we had always committed, but there will be moderate help from the restructuring program to those results,” Mucic told in an interview after the announcement.
“What this is about is a very targeted effort to streamline our portfolio further and concentrate investments on the areas where we can have the most positive impact,” he further stated.
It comes after the firm reported positive fourth-quarter results during the call.
“Our cloud momentum is accelerating in the fourth quarter with S/4HANA. Cloud revenue is accelerating once again and expanding at 90%. We also returned to positive operating profit development of 2%,” said Klein.
“For the complete year, we met our guidance across the board with our cloud revenue increasing 24%, up five percentage costs from 2021,” he said.
He added that the firm achieved this despite exiting Russia and the ongoing global macroeconomic volatilities.
Last week, Klein suggested that the firm avoid laying off workers, as it is “in a powerful position,” stated.
He added that he lived broadly optimistic regarding the outlook for technology despite challenges posed by higher interest rates and supply chain disruptions.
“In the tech sector, we at SAP are very confident regarding the year ahead,” Klein said.
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