During SAP’s Q2 earnings call, the enterprise tech giant shared an update on its ongoing “workforce transformation” program.
The update revealed that 2,000 positions had been scrapped last quarter, with the affected employees departing voluntarily, leaving non-voluntarily, or being reskilled.
Altogether, SAP plans to shut down 8,000 jobs before the year's end.
However, most turnover was expected toward the end of 2024, so SAP could ramp up its reskilling and rehiring processes.
Indeed, SAP only planned to close 1,000 roles in Q2.
Nevertheless, in April, the company reportedly notified 75 percent of the 8,000 employees that the transformation would impact. That may have encouraged many to jump ship early.
Christian Klein, CEO of SAP, confirmed that this rise to 2,000 jobs stemmed from a spike in voluntary – and non-voluntary - departures, not necessarily reskilling.
During the Q2 earnings call, he acknowledged that it had been an "abnormal" quarter before noting:
We've seen a lot of reduction… especially in those countries where we had either fast voluntary measures, like in the U.S., but also non-voluntary measures, frankly.
Given this somewhat unexpected exodus, SAP’s teams may worry that they’ll be left temporarily short-staffed as the company’s reskilling efforts take shape.
Yet, Klein also pledged to speed up the business's recruitment efforts. "You'll see the hiring actually accelerate because these kinds of initiatives are a bit more back-end loaded," he said.
Although, he caveated that by stating: "Even if we rehire, we do it in a more cost-effective way than what was the status before, and sometimes we don't rehire at all."
Such comments perhaps parrot the concerns of SAP’s European Workers Council, which panned the company’s "transformation" program in April as a guise for workforce reductions and cost-cutting.
However, Klein stressed shortly after: "Where our SAP colleagues are affected by restructuring, we are moving with care and empathy, always aware of our social responsibility."
As to where many of the 2,000 jobs may have come from, reports at the start of the quarter highlighted wide-scale layoffs in Montreal and San Franciso.
In May, these spilled over to SAP Labs India, with 300 job losses in Bengaluru and Gurgaon.
Nevertheless, Europe is the primary target of these transformation efforts, with 4,100 of the 8,000 impacted jobs expected to come from the continent, with 2,600 based in Germany.
Thankfully, however, SAP has no plans to raise that 8,000 job target despite reports that it could rise to 10,000. "We are still keeping the target for the full year constant," disclosed Klein.
Other Takeaways from SAP’s Q2 Earnings Call
Alongside its workforce transformation update, SAP shared that its overall revenues had risen ten percent to $9.02BN year-over-year (YoY) last quarter during the earnings call.
