Software Company SAP to Lay Off 3,000 Workers, That Is 2.5% of Its Workforce

One of the big software giants from Germany, SAP, has made a decision to lay off about 3000 workers, which is approximately 2.5% of the company's workforce. The Walldorf-based company is, known for offering both cloud-based computing services and traditional software, is on its decision to be among the tech companies laying off staff.

Why is SAP reducing its workforce headcount?

The software company is reducing the headcount of its workforce due to a targeted restructuring program aimed at strengthening the company's core business and improving its efficiency. The company said the restructuring is meant to lead to a yearly saving of 300 – 350 million euros from 2024.

This will also aid the investments into strategic growth areas of the company. The restructuring is meant to affect approximately 2.5% of SAP's workforce, which was revealed in an earnings report unveiling the full-year results of 2022.

"In 2023, we intend to sharpen this portfolio focus further," Klein said. "As we continue to build on our core strengths, we will be pivoting our CX [customer experience] and industry areas to focus more on specific industries, complemented by a strong ecosystem. This focus on our core and ongoing optimization of SAP's structure for cloud success is behind the [Qualtrics] announcement we made today."

How many staff does SAP have?

The Walldorf-based group has a workforce of around 12,000 globally, meaning about 3,000 workers will be leaving the company due to the layoff decision. The job cull from the company is said to cost SAP between 250 and 300 million euros, mainly in the first quarter of 2023.

More on the software company

The job cull from the company is said to cost SAP between 250 and 300 million euros, mainly in the first quarter of 2023. The software company said it would explore the sale of its Qualtrics subsidiary, which specializes in online market research software.

The sale would progressively allow SAP to fix its gaze on the core cloud business. In 2022, the software company said its revenue of around 30.9 billion euros, which is 11% up as against the previous year. The operating profits came in at just over 8 billion euros, which went down by 2% compared to 2021. In 2023, the company expects its operating profits to increase by 10 to 13%.

Revenue for SAP's fourth quarter (which concluded on December 31, 2022) increased by 6% to 8.44 billion euros ($9.17 billion) from 7.98 billion euros ($8.67 billion) in the previous period. However, the corporation only declared a profit of €332 million ($360.8 million) for the quarter, a decline of 77% from the $1.57 billion ($1.44 billion) it made the previous year.

SAP reported total sales of 30.87 billion euros ($33.56 billion) in 2022, an increase of 11% over 2021's 30.26 billion euros ($27.84 billion). The annual profit was 1.71 billion euros ($1.86 billion), a 68 percent decrease from the 5.38 billion euros ($5.84 billion) earned the previous year.

On the call, SAP's CFO, Luka Mucic, stated that cloud revenue would surpass all other income streams in 2022. In the fourth quarter, cloud revenue climbed by 30% to 3.39 billion euros ($3.68 billion), and for the entire year 2022, it increased by 33% to 12.56 billion euros ($13.64 billion).

Final words on SAP

SAP, the software company's decision to lay off workers follows a similar thread among tech companies. Giant tech companies like Google, Meta, Twitter, Amazon Inc., HP Inc., IBM, and Microsoft, among many others, as they are all scared of the looming economic downturn. The decision and has been made and has affected some people, we hope that this will die down over time, and the economy will find it's boost as well.

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