German technology giant SAP has revealed a restructuring initiative amounting to 2 billion euros ($2.17 billion) for the year 2024, impacting approximately 8,000 employees as part of its strategic shift towards Artificial Intelligence (AI).
SAP stated in a press release that in 2024, the company will intensify its focus on key growth areas, particularly Business AI. The restructuring aims to revamp its operational framework to leverage organizational synergies, AI-driven efficiencies, and position the company for substantial future revenue growth.
As of December 2023, SAP had a workforce of 107,602 full-time employees. While the exact number of job cuts resulting from the restructuring remains undisclosed, SAP anticipates that most of the 8,000 affected positions will be addressed through voluntary departure programs and internal re-skilling initiatives. Consequently, despite the restructuring, the overall headcount is expected to remain stable by the year-end. Notably, SAP had previously announced a reduction of 3,000 jobs.
Industry analysts view this restructuring as a strategic move by SAP to align its workforce with the evolving demands of the AI landscape. Pareekh Jain, CEO of Pareekh Consulting, highlighted that SAP aims to refine its employee composition by balancing experience and skills. This adjustment involves facilitating the retirement of senior staff to make way for younger generative AI experts, thereby altering the experience mix. Simultaneously, reskilling existing employees in Generative AI, alongside recruiting external GenAI talent, will contribute to a shift in the skill composition. This strategic realignment mirrors similar workforce transformations seen in tech behemoths like Google and Amazon, where job cuts are being made to enhance the experience and skill mix.
SAP’s restructuring strategy aligns with a broader trend in the tech industry, with companies such as Google, Meta, IBM, Salesforce, and Amazon also undergoing workforce adjustments to adapt to the AI-driven paradigm. Google’s CEO, Sundar Pichai, recently cautioned about further job reductions anticipated in 2024.
