SAP Announces Major Restructuring Plan to Focus on AI Growth

On January 23, 2024, Germany-based enterprise software giant SAP SE revealed plans to restructure up to 8,000 roles as part of a broader initiative to emphasize growth in artificial intelligence (AI)-driven business areas. The restructuring will primarily be carried out through voluntary leave programs and internal re-skilling measures, with the aim of maintaining the overall headcount at the current level of approximately 108,000 full-time employees. The company's decision to reposition itself for accelerated growth, particularly in AI, was met with positive investor response, leading to a more than 5% increase in its stock during extended trading.

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SAP's focus on AI aligns with its broader strategy to become more cloud-centric under the leadership of CEO Christian Klein. The company's cloud services revenue reached 44% of its total revenue in the most recent fourth-quarter results, amounting to 8.47 billion euros. Despite a revised fiscal outlook for 2025, anticipating around 10 billion euros in adjusted operating profit, it aims to enhance its profitability by approximately 500 million euros through the restructuring effort. The move comes as part of a larger trend in the tech industry, where various companies have announced layoffs in recent months to adapt to evolving market dynamics.

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