Rise of AI sparks big changes at SAP affecting about 8,000 jobs

  • SAP has announced a restructuring plan that will affect 8,000 employees.

  • The shakeup comes amid a new focus on AI aimed at cutting costs and boosting profits.

  • SAP shares hit a record high Wednesday after the announcement.

SAP will offer buyouts or different roles to about 8,000 workers in a restructuring plan related to the rapid rise of artificial intelligence.

The changes at the German software company are part of a $2.2 billion "transformation program" that aims to cut costs while introducing a new focus on AI — a key strategic growth area.

SAP had 107,600 employees at the end of 2023, meaning the restructuring will affect 7% of the workforce.

Staff are not being laid off. Instead, some will be offered voluntary redundancy, while others will be retrained.

The software company, known for producing cloud products, said the changes were necessary to "ensure that SAP's skillset and resources continue to meet future business needs."

However, it said headcount would be about the same by the end of the year, implying that new jobs would be created in priority areas.

"SAP is opening the next chapter: with the planned transformation program, we are intensifying the shift of investments to strategic growth areas, above all Business AI," said CEO Christian Klein.

The company projected that operating profit would rise to about 10 billion euros ($10.9 billion) by 2025 following the restructuring, but did not detail what new services would be developed.

Shares in SAP, which is Europe's seventh most-valuable company, rose 8% to a record high on Wednesday.

The new plan comes as SAP reported better-than-expected earnings, with revenue for its key cloud business expected to rise by about a quarter.

SAP has been trying to incorporate AI solutions into its products, and has also invested about $1 billion in AI enterprise startups.

It joins the slew of big tech companies, including Google and Microsoft, in making changes to their workforce following the rapid rise of AI.

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