Enterprise software titan SAP is restructuring 8,000 jobs, which is over 7% of its 108,000 employees, as part of its €2 billion ($2.2 billion) reshaping focus towards artificial intelligence, joining other firms adjusting to the growing significance of AI.
The German company mentioned in a statement that this move is crucial to ready the firm for future scalable revenue growth.
The positions affected will mostly be addressed through voluntary leave programs and internal re-skilling initiatives, the company stated. Following reinvestments, SAP anticipates its workforce count towards the end of 2024 to be similar to present levels.
“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,” CEO Christian Klein said in a separate statement. “We are confident about the company’s prospects in 2024.”
SAP is the latest firm to prioritize generative AI, the technology that powers popular platforms like ChatGPT. The company previously announced investments in three generative AI companies last summer, reaffirming its commitment to funding AI-powered enterprise tech startups with over $1 billion.
In tandem, other global companies are enhancing their AI capabilities. Wipro, a leading Indian software services provider, disclosed a plan to invest $1 billion over the following three years in AI, including comprehensive training for its 250,000-strong workforce.
In September, Chinese tech giant Huawei pledged to zero in on AI for the next decade, mirroring a similar announcement from Alibaba. Various US tech firms are also initiating extensive reorganizations fueled by significant AI investments.
In its recent earnings report, SAP exceeded expectations and predicted a 24%-27% revenue boost for its key cloud business in the coming year, highlighting anticipated growth acceleration. These announcements resulted in a 4% surge in SAP’s shares in after-hours trading in New York on Tuesday.
The company expects the majority of the restructuring costs to be incurred in the first half of 2024, which will affect its operating profit.
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