Germany-based enterprise software giant SAP SE said Tuesday it plans to restructure as many as 8,000 roles as part of a wider effort to focus on growth in artificial intelligence-driven business areas. The SAP layoffs in 2024 mark a significant shift in the company’s direction.

The restructuring would be implemented mainly through voluntary leave programs and internal re-skilling measures, the company said.

In a statement, SAP promised that its overall headcount should remain the same at the end of the year. It’s believed to have 108,000 full-time employees at present, which means the restructuring effort will affect about 7% of its staff.

The announcement of SAP layoffs in 2024 was met positively by investors, with the company’s stock rising more than 5% in extended trading Tuesday ahead of its earnings release early Wednesday. SAP’s stock gained about 50% in the last year, registering its best performance since 2012. In contrast, the Nasdaq Composite index rose by 43% last year.

The company wants to reposition itself for faster growth, driven in part by AI. Its revenue increased 5% year-over-year in the fourth quarter, which is not to be sneered at considering how high interest rates and concerns over the economy have hampered tech spending. Numerous big technology companies announced layoffs in the last 18 months, in a trend that began towards the end of 2022, with SAP itself laying off 3,000 workers last year.

That trend has continued into 2024, with Amazon.com Inc. and Alphabet Inc. both announcing layoffs this month.

SAP said in its statement it’s forecasting about 10 billion euros ($10.85 billion) in adjusted operating profit for fiscal 2025, down by 2 billion euros from its previous outlook. It said the lower forecast is from share-based compensation. However, it hopes that the restructuring effort will boost its operating profit by about 500 million euros.

SAP has been working to become more cloud-centric since Chief Executive Christian Klein took over the company’s hot seat in 2020. He was initially named co-CEO alongside Jennifer Morgan in 2019, replacing Bill McDermott, before becoming its sole leader.

Under Klein’s leadership, SAP has tried to replicate the cloud shifts seen at companies such as Oracle Corp., Microsoft Corp. and Adobe Inc., and those efforts have been paying off. In its most recent, fourth-quarter results, the company reported that 44% of its revenue, or 8.47 billion euros, was derived from cloud services, up from just 25% in 2019.

Photo: SAP