SAP’s Job Restructuring Spurs Record Stock Highs

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Bold Restructuring Move for AI Focus

Shares of SAP, one of Europe’s major tech companies, surged over 9% to reach all-time highs following its announcement of significant job restructuring. The restructuring, impacting approximately 8,000 jobs out of the current 107,000, is part of SAP’s strategic shift towards embracing generative AI, fundamentally reshaping its business operations.

Commitment to AI Investment

In a bold move, SAP has committed €2 billion to re-investments, earmarked for supporting AI-powered technology startups and providing training to bolster artificial intelligence-driven business areas. The restructuring plan aligns with SAP’s vision to lead in innovation while enhancing the scalability of its operating model, with a particular emphasis on Business AI.

Transformation Amidst Voluntary Leave Programs

SAP clarified that the majority of the affected positions are expected to be addressed through voluntary leave programs and internal re-skilling initiatives. By the end of the year, the company anticipates the staff numbers to be “similar to the current levels.” The voluntary nature of these programs reflects SAP’s commitment to managing the transformation in a collaborative and constructive manner.

Efficiency Boost and Profit Projection

The tech giant envisions that the transformation will result in a substantial increase in efficiency, contributing to a predicted half-billion euros boost in operating profit by 2025. This move mirrors a broader trend in the tech industry, with companies like Google and Microsoft embracing artificial intelligence to automate various aspects of their operations, often leading to workforce restructuring.

Robust Financial Performance

Alongside the restructuring announcement, SAP released its financial results for the last quarter and the entire year of 2023. The figures exceeded expectations, propelling the company’s shares further. Notably, SAP witnessed a 9% increase in operating profit and a 5% rise in revenue for the full year of 2023. The key cloud business experienced a substantial 20% annual revenue surge, setting the stage for accelerated growth in this segment throughout 2024. SAP’s robust financial performance over the past year contributed to the positive response from investors, reflecting confidence in the company’s strategic direction.

SOURCE: Ref Image from Business Insider

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