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SAP Seeks To Strengthen Its Business With A Restructuring Program
SAP, the German software company, announced that it will start a restructuring program after being disappointed with last year’s fourth-quarter balance sheet. The program includes the layoff of a large number of employees, totaling approximately 2,800 workers. Thus, at this time, the company seeks to strengthen its cloud business.
The Software Giant Expects The Program To Generate Annual Savings Of Up To €350 Million Starting In 2024
SAP, which is headquartered in Walldorf, announced this Thursday (26) that it will account for most of the €250 million to €300 million in restructuring costs in the current quarter. The software company expects the program to generate annual savings of €300 million to €350 million starting in 2024.
It’s possible that SAP’s initiative was influenced by major U.S. tech companies, such as Microsoft, Meta Platforms (Facebook), and Alphabet (Google), which announced plans to cut thousands of employees. At the end of last year, the company employed about 112,000 people, meaning that the layoffs caused by its restructuring will affect around 2.5% of its workforce.
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SAP’s Slowing Growth That Led To The Planning Of The Major Layoff
The SAP restructuring program comes after the German company’s revenue grew less than expected in the fourth quarter of 2022. According to information from Dow Jones Newswires, the company generated €8.44 billion, compared to €7.98 billion in the same period the previous year. In this comparison, only the revenue from the cloud unit advanced from €2.61 billion to €3.39 billion. Analysts consulted by FactSet had predicted total revenue of €8.51 billion and cloud revenue of €3.44 billion.
