One of the most valuable companies in Europe is undergoing a restructuring process that involves 8,000 jobs as part of its strategic shift towards artificial intelligence.
SAP, the German enterprise software behemoth, revealed its plan on Tuesday to allocate €2 billion ($2.2 billion) this year towards this transformation, including initiatives like buyouts and training programs.
This decision was deemed essential “to position the company for scalable future revenue growth,” according to a statement from SAP.
Consequently, a significant portion of its workforce, representing over 7% of its 108,000 employees, will experience the impact of these changes.
SAP stated, “The majority of the approximately 8,000 affected positions are expected to be addressed through voluntary departure schemes and internal upskilling efforts.”
Upon completion of these reinvestments, SAP anticipates that by the end of 2024, its headcount will align with the current levels.
CEO Christian Klein expressed, “SAP is embarking on a new chapter: through the proposed transformation program, we are accelerating the shift of investments towards strategic growth areas, particularly Business AI. We are optimistic about the company’s outlook in 2024.”
SAP now joins the ranks of companies prioritizing artificial intelligence, with a focus on generative AI, the technology powering popular platforms like ChatGPT.
Last summer, SAP disclosed investments in three generative AI firms, in addition to committing over $1 billion to support AI-driven enterprise technology startups.
Similarly, Wipro, a leading provider of software services in India, announced a $1 billion investment in enhancing its AI capabilities over the next three years, including training its extensive workforce of 250,000 in utilizing this technology.
In a parallel move, Huawei, the Chinese tech heavyweight, declared a full-fledged commitment to AI for the next decade, following a similar strategy by Alibaba. Several US tech giants have also outlined substantial AI investments as they embark on significant organizational overhauls.
In a separate development on the same day, SAP disclosed annual earnings that surpassed expectations. It projected a revenue surge of 24% to 27% for its primary cloud business in the upcoming year, citing an anticipated rapid growth in that sector.
Following these announcements, SAP’s shares witnessed a 4% surge in after-hours trading in New York on Tuesday.
SAP anticipates that the majority of expenses related to the restructuring will impact its operating profit in the first half of 2024.
