SAP Restructuring Prompts Thousands of Job Cuts

Nearly 450 SAP employees in California will lose their jobs as part of the company’s plan to shed about 4,400 employees globally, through layoffs and early retirement, in a companywide restructuring program.

Of the California layoffs, 173 are in San Ramon, 94 in South San Francisco and 179 in Palo Alto as the facilities restructure their workforces, according to notices filed by the enterprise application software vendor with the California Employment Development Department. The employees have been notified and their last day will be May 15.

Developers, development experts, senior developers and product experts are among the workers most impacted in the Golden State.

As of 2018, SAP had nearly 96,500 full-time employees globally.

In a statement, SAP tells Channel Partners the company is constantly changing to adapt to market and customer needs.

“As part of this ongoing transformation, SAP has decided to undertake a companywide restructuring program in 2019 across all board areas,” it said. “This will allow us to not only invest in but also ensure greater efficiencies for key growth areas while implementing required changes in other areas to ensure they are prepared for the future. SAP currently estimates that globally approximately 4,400 employees across all board areas will leave the company under the restructuring program. In cases where new jobs are created, we will do everything possible to give SAP employees first priority. SAP is committed to treating employees with utmost respect and conversations with impacted employees are currently taking place in countries outside of the European Economic Area (Non-EEA) and will start in the EEA countries in [the second quarter]. Early retirement has already been offered to employees in the United States and Canada, and will also be offered to employees in Germany and France, as well as voluntary redundancy programs in Germany and other countries.”

The restructuring is not about shrinking the company, SAP says.

“Indeed, in 2019 we expect to grow to more than 100,000 colleagues around the world,” it said.

Brad Shimmin, service director at GlobalData, said the “main question raised by this round of layoffs for the software giant revolve around the company’s priorities.”

“Long revered as an engineering might, SAP’s decision to lay off engineers and senior product specialists appears to point toward a deprioritization of this aspect, at least in the Bay Area,” he told Channel Partners. “That said, as we’ve seen more broadly in the technology industry, in plying modern software development and deployment practices (containerization and agile development, for instance), vendors are able to do more with less. Often this entails rationalizing overlapping functionality and products, which heretofore were left running in tandem because the costs were simply too high to bring them together. Given this, it is quite possible that SAP is simply realigning its workforce around those gained efficiencies.”

Analysts expect SAP to report $6.74 billion in sales for the current fiscal quarter. The company reported $6.46 billion in sales during the same quarter last year, which would indicate a positive year-over-year growth rate of 4.3 percent.

Also this month, 352 Oracle employees in California, including software and application developers, and others, were notified they will lose their jobs in May. Oracle reportedly laid off hundreds of employees as it continues shifting resources from old business to cloud computing.