SAP Announces Major Restructuring with Focus on AI, Shares Soar

One of Europe’s leading tech companies, SAP, has unveiled plans to restructure 8,000 jobs as part of a strategic shift towards artificial intelligence (AI). The announcement has led to a surge in SAP shares, which jumped more than 9% and reached record levels on Wednesday.

The software giant, recognised for its products for managing business operations and customer relations, is committing €2 billion to reinvestments. These investments will include supporting AI-powered technology startups and training to enhance AI-driven business areas. The restructuring initiative is seen as a proactive response to the anticipated impact of generative AI on the company’s business model.

The transformation will affect approximately 8,000 current employees out of SAP’s workforce of over 107,000. According to the company, internal reskilling initiatives and voluntary leave programmes should cover the majority of the positions. SAP aims to conclude the restructuring by the end of the year, with the workforce expected to remain at similar levels.

SAP’s CEO, Christian Klein, emphasised the strategic nature of the transformation programmeme, stating, “With the planned transformation programmeme, we are intensifying the shift of investments to strategic growth areas, above all Business AI. In the future, this will empower us to keep leading with innovation while increasing the scalability of the operating model.”

Moving Markets

The move aligns with a broader trend among global tech companies, including Google and Microsoft, which have recently announced layoffs as they increasingly embrace artificial intelligence software to automate various operations.

SAP anticipates that the restructuring will significantly enhance efficiency, leading to a projected increase in operating profit of half a billion euros in 2025.

In addition to the restructuring announcement, SAP has released its financial results for the last three months and the entire year of 2023. The company exceeded expectations, with annual earnings beating projections and share prices soaring by over 50% throughout the preceding 12 months.

For the full year of 2023, SAP reported a 9% increase in operating profit and a 5% growth in revenue compared to the previous year. Notably, the annual revenue of its crucial cloud business experienced a substantial 20% jump. SAP is optimistic about continued growth in this segment and anticipates accelerated expansion in 2024.


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