SAP's €1 billion restructuring to throw thousands out of jobs

Berlin: German software giant SAP said Tuesday it would slash 3,000 jobs in a billion-euro restructuring plan after profits stagnated in 2018, while insisting it was on track to grow revenues and earnings this year. "We are talking about a completely voluntary programme, we expect a number slightly higher than in 2015 of employees" to leave, chief financial officer Luka Mucic said. In that year, SAP cut 2,200 positions as the group shifted focus to "cloud" computing from traditional software.

In total, executives plan to spend between 800 million and 950 million euros (USD 915-1.1 billion) on restructuring in 2019 "to further simplify company structures and processes".

They aim to realise "a minor cost benefit" this year, before slashing annual outgoings by up to 850 million euros from 2020. Chief executive Bill McDermott said the departures were necessary to clear the way for SAP to make new bets on growth areas in the software industry. "We are going to move our people and our focus to the areas SAP needs the most, AI (artificial intelligence), blockchain, internet of things, quantum computing," he said. "We currently have 95,000 people in the company, if we talk in a few years it will be more," McDermott added.

SAP's restructuring announcement came as it reported net profit added just one percent last year to reach 4.1 billion euros. The group preferred to play up operating, or underlying profit that surged 17 per cent, to 5.7 billion euros, on revenues up 5.0 per cent at 24.7 billion euros.