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SAP headquarters in Walldorf, Baden-Württemberg, Germany
Hong Kong CNN –
One of Europe's most valuable companies is restructuring 8,000 jobs, joining a growing list of companies shifting their focus to artificial intelligence.
SAP (SAP), the enterprise software giant, said on Tuesday it would spend 2 billion euros ($2.2 billion) on transformation this year Takeovers and retraining programs.
The decision was necessary “to prepare the company for highly scalable future revenue growth,” the German company said in a statement.
This will affect a significant proportion of the workforce, more than 7% of the 108,000 employees.
“The majority of the approximately 8,000 affected positions are expected to be covered by voluntary furlough programs and internal retraining measures,” SAP said.
Once the reinvestments are made, “SAP expects to end 2024 with headcount in line with current levels,” it said.
“SAP is opening the next chapter: With the planned transformation program, we are increasing the shift of investments into strategic growth areas, especially Business AI,” said CEO Christian Klein in a separate statement. “We are confident about the company’s prospects in 2024.”
SAP is the latest company to prioritize AI as generative AI, the technology underlying popular platforms like ChatGPT, has taken the world by storm.
Last summer, the company announced investments in three generative AI companies, adding to its commitment to invest more than $1 billion to fund AI-powered enterprise technology startups.
Last July, Wipro, one of India's leading software services providers, announced that it would invest $1 billion over the next three years to improve its AI capabilities, including training its entire 250,000 employees to use the technology .
In September, Chinese tech giant Huawei announced it would focus entirely on AI over the next decade, following a similar move by Alibaba (BABA). Many U.S. tech companies have also announced major investments in AI as they embark on major restructuring.
Separately, SAP reported annual profit on Tuesday that largely exceeded expectations. The company forecasts a 24% to 27% jump in revenue for its core cloud business next year and expects accelerated growth in this area.
Shares of the company rose 4% in after-hours trading in New York on Tuesday following the announcements.
SAP expects the majority of costs associated with the restructuring to be incurred in the first half of 2024, which will impact operating profit, it said.