The German software company SAP SE said that it will reorganize responsibilities for 8,000 workers in order to zero in on expanding its AI-driven business areas. This news caused shares of SAP SE to rise 7% to an all-time high. It announced that it will invest 2 billion euros, or $2.2 billion, in the initiative to either retrain staff members with AI skills or replace them via voluntary layoffs.
SAP began testing with OpenAI’s ChatGPT right away as generative AI began to advance in pace and revealed intentions to include it in the company’s goods early last year, expecting to finish 2024 with a headcount equivalent to current levels. The German firm now anticipates that GenAI will radically alter its industry, and it has committed to investing over $1 billion to support AI-powered tech companies via Sapphire Ventures, its investment arm.
In an effort to focus more on automation and artificial intelligence software to reduce workloads, IT businesses, especially multinational behemoths like Google and Microsoft, have started laying off employees in large numbers in recent months. Due to efficiency gains, the majority of the restructuring expenses would be incurred in the first half of the fiscal year and would add 500 million euros to operational profit in 2025.
SAP projects double-digit percentage increase in overall operating profit and revenue from its core cloud operation for the current year based on prospects, provided that the 2023 statistics either met or above expectations.
Following consensus-driven growth of 23% to 13.66 billion euros in 2023 (after currency impacts were taken into account), SAP stated that cloud revenue is predicted to rise by 24% to 27% in 2024. Operating profit exceeded the company’s projected growth of 9% last year, rising a currency-adjusted 13% to 8.7 billion euros. SAP projects that percentage to increase by 17% to 21% by 2024.
The German-based business software maker further lowered its 2025 operational profit goal to 10 billion euros from roughly 11.5 billion euros previously on Tuesday in order to account for a change in accounting standards in its medium-term view.
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