SAP is cutting more jobs than planned
In January, SAP announces a restructuring program: To prepare for the Age of Artificial Intelligence, 8000 employees are to go. The prospect of severance pay or retirement is so attractive to employees that the software company now wants to cut even more jobs.
Europe's largest software manufacturer SAP is expanding its job reduction program due to the willingness of many employees to leave. Instead of 8,000 jobs, now 9,000 to 10,000 of the current positions are to be cut, as Walldorf announced after the US stock market close. At the end of the second quarter, there were 105,315 positions - and that's already almost 3,000 fewer than three months earlier.
SAP had announced at the beginning of the year that thousands of jobs would be cut to prepare for the era of Artificial Intelligence. At the same time, new jobs were to be created in this area. At the beginning of June, the "Handelsblatt" reported that the severance and retirement program was meeting greater interest among employees than expected.
"There is a higher acceptance rate in our voluntary program," said CEO Christian Klein in a conference call on the figures for the second quarter. With new hires and reskilling measures, the number of employees is expected to still be approximately the same at the end of 2024 as at the end of 2023. Preparations have also been made to ensure that necessary skills are not lost. SAP has reserved the right to reject certain severance application, "to ensure that the skills profile is ultimately where we want it to be," said CFO Dominik Asam. This was also agreed with the labor unions.
The total costs for the program now see SAP at 3 Billion Euro. In the first half of the year, restructuring expenses of 2.9 Billion Euro were recorded. In the second quarter, 0.6 Billion Euro were spent. SAP had launched the restructuring program in January and simultaneously announced higher investments in growth areas. For severance offers, the company had initially set aside 2.2 Billion Euro in provisions.
The expansion of SAP's job reduction program leads to an increase in the targeted positions to be cut, now ranging from 9,000 to 10,000. This change was announced due to a higher-than-expected interest in the severance and retirement program.
During the second quarter, SAP's findings regarding the voluntary program indicate a higher acceptance rate, prompting the company to consider the need to maintain a similar employee count by 2024, despite the substantial restructuring efforts and associated costs.
