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SAP Plans Job Changes for 8,000 Positions to Better Focus on AI Business Areas

CIO Insider Team | Wednesday, 24 January, 2024
Separator

A 2 billion euro ($2.17 billion) reorganization plan encompassing 8,000 positions was presented by German software company SAP SE in an effort to better focus on growth in artificial intelligence (AI)-driven business areas.

SAP has committed to investing over $1 billion and is opening up new investments through its enterprise capital firm Sapphire Ventures in AI-powered technology businesses.

SAP believes that generative AI will significantly transform its business.

The company stated that it intends to restructure in order to better concentrate on important areas of growth, such business AI.

The company stated that internal reskilling initiatives and voluntary leave programs would be the primary means of implementing the restructuring program. It also stated that it anticipates ending 2024 with a headcount "similar to the current levels."

Approximately 105,000 people work at SAP, according to the business website.

The company stated that the restructuring costs would primarily show up in the first half of 2024 and would have an effect on operational profit.

Additionally, the company that makes business software predicted that cloud sales would reach 17 billion euros to 17.3 billion euros in 2024.

It also revised its view for 2025, estimating that adjusted cloud gross profit will reach roughly 16.2 billion euros.

At the end of 2023, its primary cloud business revenue was $13.66 billion euros, less than its projected revenue of 14.06 billion euros.

SAP has committed to investing over $1 billion and is opening up new investments through its enterprise capital firm Sapphire Ventures in AI-powered technology businesses.

The software company's third-quarter cloud revenue forecast was below analyst projections in the past.

Beginning in 2024, businesses have been continuing their downsizing efforts; last month, Alphabet and Amazon announced layoffs.

SAP stated that their revised operating profit estimate for 2025 is 10 billion euros, or $10.85 billion.

Due to share-based compensation, it is a two billion euro decrease from its prior outlook; but, expected restructuring savings will result in an increase of 500 million euros.

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