SAP to Cut Jobs Amid Transition -- Update

By Archibald Preuschat and Friedrich Geiger 

FRANKFURT-- SAP SE said it plans job cuts that could affect as much as 3% of its current global workforce, as the German software company transitions from offering installed applications to a cloud-based business model.

The company declined to specify the exact number of cuts, but said 2,200 employees would be affected in some way by the restructuring. It said that even as it was paring staff, it was also hiring for new positions, and expects to have more staff at the end of the year than at the start.

It said some staff deemed redundant in the transition will be trained for other positions. Those unwilling or unable to qualify for new positions will be asked to leave, it said. In Europe, affected staff will be offered early retirement or other compensation, a spokesman said.

SAP declined to say where other job changes would take place. SAP's global workforce numbered 74,400 at the end of 2014, with 16,000 based in the U.S.

SAP's changing personnel requirements reflect a major transition of its business model. It is shifting its offering to applications that are accessed over the Internet from on-premise software.

The transition is taking a toll on the company's performance. In January, SAP dropped its medium-term profit margin guidance and reported a 1% slide in fourth-quarter net profit, partly because cloud products initially generate less revenue than installed software, which has a higher one-time purchase price.

However, cloud applications don't require employees that install and update software on customers' computers, reducing SAP's need for support staff.

Software developers make up the majority of SAP's U.S. staff, suggesting that the country won't be heavily affected by job cuts. A quarter of the company's U.S. staff work in the Bay Area.

The plan comes after similar personnel moves last year, which affected about 2,000 employees. A large number of those have been moved to other positions at SAP, the company said.

Write to Archibald Preuschat at [e-mail] and Friedrich Geiger at [e-mail]

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