SAP To Restructure 8,000 Jobs, Amid Business AI Push

The workforce at SAP has been informed that 8,000 jobs will be impacted by an ambitious restructuring plan.

As the German software giant announced its fourth quarter and full year 2023 results, it also confirmed that a “planned transformation program including restructuring in 2024 reflects focus on scalability of operations and Business AI.”

It confirmed that it will restructure roles for 8,000 jobs, and spend 2 billion euros ($2.2 billion) on the programme that will see staff either retrained with AI skills, or replaced  via voluntary redundancy programs.

Restructuring plan

The news sent SAP shares up 7 percent to an all-time high, Reuters reported.

But the firm also reportedly said that it expects to end 2024 with a headcount similar to current levels.

Most of the restructuring costs would be in the first half of the year, and contribute 500 million euros to operating profit in 2025 due to efficiency improvements, Reuters reported.

This restructuring comes after SAP in January 2023 already axed 3,000 jobs, or 2.5 percent of its global workforce.

The tech industry has been rocked by a swathe of job loss announcements in the past year from tech giants including Amazon, Google, and Microsoft, as they increase their focus on AI.

Business AI

SAP has been experimenting with machine learning for a number of years now, but when OpenAI’s ChatGPT began gaining traction, it announced plans to embed the generative AI tech in its products early last year.

SAP now expects GenAI to fundamentally change its business and has pledged to invest more than $1 billion by backing AI-powered technology startups through its investment arm Sapphire Ventures, Reuters reported.

“SAP has delivered: We met or exceeded our outlook for 2023 in all key metrics,” said CEO Christian Klein, commenting on SAP’s latest financial results. “Based on a stellar order entry, our current cloud backlog expanded by 27 percent – an all-time high. We are confident about the company’s prospects in 2024.”

“From this position of strength, SAP is opening the next chapter: with the planned transformation program, we are intensifying the shift of investments to strategic growth areas, above all Business AI,” said Klein. “Going forward, this will empower us to keep leading with innovation while increasing the scalability of the operating model.”