SAP announces global job cuts of 3,000, to raise funds through Qualtrics stake sale
- ByStartupStory | January 27, 2023
SAP, a German software company, announced on Thursday that it will be cutting 3000 jobs, representing a 2.5% reduction in its global workforce. Additionally, the company is also planning to sell its remaining stake in Qualtrics.
The layoffs come after SAP reported a 30 per cent increase in revenue thanks to its cloud business in the fourth quarter, which was driven by strong demand for its software.
As part of its cost-saving measures and shift towards cloud operations, global software company SAP announced plans to eliminate 3000 jobs globally, representing 2.5% of its workforce. This move follows a trend among tech giants such as Google, Microsoft, and Amazon, who have also recently announced job cuts amidst anticipation of a challenging economic environment in 2023 despite record profits in the previous year.
Besides laying off about 3000 people, SAP is also looking to sell off its stake in Qualtrics and has already started the process. SAP bought the company for $8 billion in 2018 and took it public in 2021 at a valuation of nearly $21 billion.However, since then, Qualtrics has seen two-thirds of its value wiped away. As of writing this piece, Qualtrics has a market value of $7 billion. SAP’s stake in Qualtrics is at 71 per cent.
According to the company’s financial statements this year’s core operating profit would be between 8.8 and 8.9 billion euros. Additionally, it anticipates revenue from its cloud services would increase from 12.56 billion euros in 2018 to 15.3 to 15.7 billion euros in 2023.While experts had expressed worry that SAP’s profitable cloud business would suffer if other businesses cut their expenses as a result of the uncertain economy, SAP has been gaining new clients.
SAP has around 120,000 employees. The job cuts will cost the company between $358 million and $429 million, mainly in the first quarter of 2023. It expects to increase its operating profits by 10% to 13% in 2023. The reshuffling is expected to lead to annual savings of $326 million to $380 million in 2024. The company said that it will help fuel investment in strategic growth areas.
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