Thread regarding SAP layoffs

Sadly it's been out with the old - in with the new lately

Oracle is an American company - The US is Oracle largest and major contributor to its overall revenue so it would make sense that they have to invest here.

Don't be fooled, no US tariffs program ( or anything else) is going to get SAP to make any investments, let alone major ones, in the US. They already made whatever investment they needed to make in the US and going forward it's all about 'lift and shift" - just look at the infrastructure they have built in India to house some 15,000 new workers.... see anything even remotely similar being built in the US ???

As much as I would love to see it, unfortunately those days are long, long, long gone.... and not coming back.

Somebody wants to start a career with SAP, best advice is move to a low cost country.

@je It doesn't make sens to move a whole product (and people) to US.

Staring a new product in US or acquiring a promising company will make more sense.

For example, all these AI companies that create models based on your code to help developers make new developments faster and bug free will fit the new strategy and will make more sense...

It seems that SAP is leaning into a model :

Designed in Walldorf -> Implemented in Bangalore -> Sold everywhere

The issue is that SAP still have dev sites (Canada, Shanghai, France...)
If I was a tech in one of these high cost dev centers I get prepared.

@j9 All good. The leading ERP company is making significant investments in the US. Check the Oracle job postings. Treating your largest revenue producer as a Cash Cow isn’t going to produce strong results.

It’s a simple equation ———15K seat office in Bangalore that needs to be filled with employees. Klein already said that SAP will disproportionately hire in India, Rolling layoffs = high cost regions getting hit = North America / the less-regulated EMEA locations.

Never,never take what these a-holes say at face value. Read between the lines, listen for what they don’t say, see what is going on at other conpanies and you’ll usually find your answers.
For example, they all breezed over the performance management process as a positive thing. It’s there for SAP to recognise performance and lift up those that need help. Then we see there is a bell curve, hmm. A few months later Domidick (not a typo), mentions the 1 - 2K annual layoffs…….2+2 = 4!

Cynicism gets a very bad rap, and employers love to almost demonize cynical employees as being negative, corrosive etc,, etc. why do you think this is? It’s because cynics actually dig below the surface - level sunshine and lollipops BS, and can get to dark heart of what is going on!

There may be a time when the SAP C Suite isn’t as full of cr-p as a portapotty….Until then - Question and research everything.

Don't be fooled that somehow the environment in the US is somehow going to "require" SAP to hire people in the US and bring jobs from Europe to US.

For one, SAP already has about 20,000 employees in the US (about 1/5 of it's overall workforce) which by and large are sales related positions. They have been and continue to focus on bringing down non sales HC in the US and shifting to low cost countries. Nothing will change this.

Second, just have a quick look at Apple where just about a month ago they were threatened that they "had to start making IPhones in the USA. What happened? Well absolutely nothing, Apple continues to make all their IPhones in Asia and are continuing to ramp up production in India where they already make 25% of all Global IPhones and already manufacturing the IPhone 16.

Please don't be mislead.... SAP is not and will not be expanding it's footprint in the US. Those days are long gone.

What I thought was interesting in the quarterly call is that the numbers were actually pretty good.     Current cloud backlog up 28% at constant currencies;   Cloud revenue up 28% at constant currencies;  and non-IFRS operating profit up 35% at constant currencies. So why did the bottom fall out and the stock price fall  sharply?

All I can think of is that  companies who are on a growth trajectory aren't explaining in quarterly update calls with market analysts that they will be having an ongoing reductions of 1-2% - only companies who think they will be in a downturn do this.

Yes the "past" numbers might have looked OK, but when the CFO is setting the stage for the future by saying there will be ongoing rounds of layoffs of  1-2%  -Like  It simply is just a normal course of daily operations, the market sees a problem. 

He has yet to explain where and which teams will be taking the 1-2% cutback and also explain where these "thousands" of new workers will be brought in, 

We will see in time by the actions of SAP just exactly what he meant  but as of last week's call  - The market wasn't fooled at all.

All Asam said was just a "musical chairs" game being played on a geographical basis.

He says "thousands" will be hired by end of year and simultaneously there will be a regular layoff of 1-2% and that "external" (note didn't say "internal) can already start applying.

It's pretty simple that they want unload high cost salaries in favor of low cost. Take somebody in high cost location making $100,000K ( + benefits) can easily be replaced by someone in low cost making 1/3 the salary. SAP can get 3 heads for the price of one. What's to think about in this new world we live in?

Well in this case, given his public timeline, we won't have to wait that long to see what's up... but he is already telegraphing that layoffs will be coming shortly.

And if you were a talented AI developer- would you work for SAP or a fast moving startup with the chance to IPO and make a fortune. At least the culture of a startup is energising - no one would say that about SAP.

There is absolutely not going to be restructuring or reskilling in high cost countries. The only hiring will be in the new 15,000 employee campus in India. There will be massive reductions in high cost countries. It’s McKinsey 101. If there aren’t great new innovations to launch or brand new customers - the easiest thing to do is cut overhead and people are the highest overhead after facilities. SAP can’t keep going to the well of existing customers (just look at the investor call customers cited - GSK, Siemens) and try to get them to buy more. The whole - go to cloud and we will eliminate maintenance on your shelf ware was a one trick pony. No one should kid themselves- there’s a 5 year plan and it does not include reskiiling. You can’t stay on top forever (ibm, xerox, blockbuster) so you slash costs on your way to the bottom. The Cloud Act allows customers to take their data and move to a new provider - and they will.

@dy+1k11p3xw7 No one can do all of the work...have you spoken to an average colleague at SAP? They appear to be all so demoralized, clueless, insecure with their jobs, overworked, and seeing good people let go and not knowing whether they will have a job tomorrow. If anything, I think this is deliberate so that the board can drive attrition. So...good luck with SAP driving AI adoption because we aren't a market leader based on feedback by analysts. Customers don't appear to be using these features.

Isn’t SAP being asked to hire more employees in the US or face heavy penalties? The current administration is pi---d that European companies like SAP make so much moolah from the US market but have a somewhat smaller presence there. My hypothesis is that there will be “massive investment in the US” by hiring more FTEs in some low-cost locations and hiring in other low cost locations such as Bangalore and more and more people from high cost locations such as Germany, France, etc. will lose jobs. Product Owners and Solution Owners should start looking for new jobs as HPOM is already making them obsolete. Maybe half of the product owners and solution owners won’t be here in two years time.

@dq When a company announces layoffs, etc. they are in managed decline. SAP's future will be like IBM and Intel.

@dy As for AI talent, who on earth would work at a company paying these salaries and at a time where there are forever 1-2% layoffs? There are thousands of fully remote jobs out there for data scientists, paying $250,000 USD+ a year. Is SAP willing to poach and pay out generous packages to experienced AI talents from FAANG? Not really. They are laying off high cost locations and hiring disproportionately more Indians and LAC people.

You have the C-Suite firing people left right center. I wouldn't even want to work for Microsoft given their announced 9,000 layoff commitment.

I am based in NA, the so called "high cost" area where there has been a long term hiring freeze in place for the last 5 or more years.

So when Asam says SAP will hire "thousands' before year end and at the same time perform a 1-2% downsize, then please give me a minute to think about just where the hiring will take place and where the downsize will happen.

...OK, now i got it ...I figured it out -:) ..I am good ( ... I think...)

In terms of products I think SAP can compete and has good arguments : the products are of similar quality.

The issue I see is the strategy for AI: there's a lack of adoption by the customers and Philipp Herzig can't do all the work.

SAP needs to hire some AI stars from outside the company because the current managers aren't good enough to create the necessary adoption momentum and marketing.
You can't convert ALL (old) managers to AI :
New way of thinking
Innovations
New workflows

SAP needs new blood for AI.

@OP+1jy6ynmaf

As was stated on an earlier post ( interestingly a month ago) that the disparity between SAP Stock price and our competitors was getting larger and larger. Now with the recent quarterly update, SAP stock has fallen even more while Oracle is up 15% in just the last month.

What is clear is that the market is becoming less and less motivated by what SAP is saying and doing and looking at other tech companies to invest in.

We have all seen this playbook before ( Elliott) - when leadership begins talking about executing "regular" layoffs, the market sees a loser. Doesn't HP, CK, DA, ... realize that you cannot make sustainable improvements to the bottom line by just cutting costs?

Indeed, at minimum it is a mixed message from Asam. On the one hand he says there will be a "normal" layoff existing at all times and then says in the same breath that SAP will be hiring "thousands" in the next 5 months.

Was it intentional on his behalf to contradict himself or is it just a lack of having a real strategy as to how and where to leverage SAP resources.

At least we won't have to wait that long to see what he's talking about because in the next couple of months we shall see thousands of new people on board and also see 1-2 thousand ( 1-2%) laid off.

Can't wait.

@aa

It appears that this strategy has been for years. the stock decline 6% is not a good sign.
Frankly I would not invest in SAP in terms of investment because other stocks do better.
Client base, they are strong, however product base weak.

We shall see what the year brings. Needless to say, it does not look positive.

@OP since he's CFO, I just think he tried a communication trick to increase the stock price...it didn't work.

Since there's hiring freez in High cost centers for years, I don't think SAP will change its strategy now.

Here's what seems to be the strategy:

• Restructuring and re-skilling for high cost centers
• New hiring for low cost centers (Bangalore for AI)