SAP to cut 3000 jobs or 2.5 per cent of global workforce, plans to sell remaining stake in Qualtrics

German software giant SAP is set to lay off 2.5 per cent of its global workforce as it cuts 3000 jobs, the company announced on Thursday. Along with this, SAP is also looking to sell of its remaining stake in Qualtrics.

SAP is looking to cut costs and focus on its cloud business. The German software giant is the latest tech company to cut jobs as it joins a list that includes the like of Google, Microsoft, Amazon and a bunch of others. Tech companies across the world as bracing themselves for a tougher economic climate for 2023, despite the fact that most tech companies made record profits in the last year.

For SAP, 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.

“We expect only a moderate cost-saving impact for 2023, and a more pronounced one in 2024, about 300 million euros to 350 million in run rate savings as of 2024,” Chief Financial Officer Luka Mucic said in a call with journalists.

In Germany, where SAP is headquartered, the company will cut slightly more than 200 jobs.

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.

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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 SAP, 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.

According to Chief Executive Christian Klein, “We are going to unveil a unique strategic collaboration with BMW betting on SAP on all dimensions — one of the greatest partnerships ever, which was inked yesterday."

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