European software company SAP announced on Thursday that it will cut 2.5% of its global workforce in an effort to reduce costs and focus on its cloud business. The German company currently employs around 2,300 workers in Ireland and is the latest tech firm to announce mass layoffs, joining Facebook, Twitter and Stripe, among others.
The Move Towards Cloud Computing
SAP’s decision to restructure its workforce comes as the company looks to make a shift towards cloud computing and away from traditional software products. The move towards cloud-based solutions has been accelerated by the pandemic as businesses look to streamline their operations with technology that is more secure and cost-effective than ever before.
Cloud computing provides businesses with a range of benefits including improved scalability and flexibility, access to real-time data, increased collaboration, enhanced security, reduced costs and faster deployment times. All of these factors have helped drive demand for cloud services over the last year and SAP’s decision to focus on this area reflects this trend.
As part of its restructuring plans, SAP also said that it would explore the sale of its remaining stake in Qualtrics. Chief Financial Officer Luka Mucic said that the job cuts are expected to result in “moderate cost saving impact for 2023” followed by “a more pronounced one in 2024” with run rate savings estimated between 300 million euros to 350 million euros by 2024.
SAP’s announcement is yet another sign that tech companies are taking steps to adjust their operations in response to changing market conditions brought on by COVID-19. The move towards cloud computing is clearly having an effect on the industry as businesses look for more efficient ways of working while reducing costs at the same time. Despite the job losses associated with this restructuring plan, SAP hopes that focusing on cloud services will help them remain competitive in a rapidly changing landscape.