Last Update: January 26, 2023, 6:39 pm
The layoffs came after SAP reported 30 percent revenue growth in its cloud business in the fourth quarter.
SAP announces thousands of layoffs to cut costs as they prepare for tough economic conditions
SAP said Thursday it planned to cut 3,000 jobs, or 2.5 percent of its global workforce, and explore the sale of its remaining stake in Qualtrics, as the Germany software company looks to cut costs and… wants to focus on its cloud business. SAP is the latest tech company to cut jobs after companies including Alphabet’s Google, Microsoft and Amazon announced thousands of layoffs to cut costs as they prepare for tough economic conditions.
“We expect only a moderate cost-saving effect for 2023, and a more pronounced one in 2024, with approximately 300 million to 350 million euros in run rate savings,” chief financial officer Luca Mušić said in a call with reporters. In Germany, where SAP is headquartered, the company will cut a little over 200 jobs.
SAP cut layoffs after reporting 30% revenue growth in its cloud business in the fourth quarter, helped by strong demand for its software. SAP has also started the process of selling its stake in Qualtrix. It bought the company in 2018 for $8 billion and took it public in 2021 at a valuation of around $21 billion. Currently, survey-software vendor Qualtrics has a market value of $7 billion and SAP holds a 71% stake.
“(The sale) will result in a fairly significant one-time gain,” Musik said.
SAP forecasts core operating profit of 8.8-8.9 billion euros at constant currencies for this year. It also expects cloud revenue in stable currencies to grow to 15.3-15.7 billion euros for 2023 from 12.56 billion euros last year.
While analysts had expressed concern that SAP’s lucrative cloud business with other companies could find their budgets tightening due to economic uncertainty, SAP is contracting more customers.
“We are about to announce a unique strategic partnership with BMW, betting on SAP across all dimensions – one of the largest deals ever,” said Chief Executive Christian Klein.
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)