SAP Forecasts Further Cloud Job Cuts

German software maker SAP has said that it will be cutting around 2,200 jobs, or around 3 percent of its workforce, as it continues to readjust to a cloud-based business model.

The losses echo those of last year, with the company dropping near-term profit forecasts as cloud subscriptions from services delivered over the Internet banish the traditional software license model.

Cloud

Companies are now increasingly buying their software via the cloud on a subscription basis rather than paying a lump sum for services for a set amount of time.

“It’s not about cost savings but rather being fit for the future,” SAP chief Stefan Ries said in an interview.

The cloud-orientated business model also requires a employees with different expertise, another reason for the job restructuring.

SAP said that it will help in finding new placements for the affected employees, as well as offer early retirement and voluntary severance programs.

In January, SAP cut its 2017 operating outlook, pinning the blame on the shift to a cloud-based software delivery model that will nip away at its profit margins until a turnaround in 2018.

SAP admitted that its 2017 operating profit will be between £4.8bn and £5.4bn.

SAP had previously predicted an operating margin of 35 percent on revenues up to £16.9bn, providing an operating profit of about £5.9bn, but that’s now dropped to 33.3 percent.

Take our business mobility quiz here!

Ben Sullivan

Ben covers web and technology giants such as Google, Amazon, and Microsoft and their impact on the cloud computing industry, whilst also writing about data centre players and their increasing importance in Europe. He also covers future technologies such as drones, aerospace, science, and the effect of technology on the environment.

Recent Posts

Gloucester City Council Confirms ‘Cyber Incident’

Council IT services hit by so called 'sleeper' malware, with media reports pointing the finger…

17 hours ago

Gigabyte Broadband Pledge At Risk, Warns Spending Watchdog

UK pledge to close the digital divide of broadband services for urban and rural customers…

19 hours ago

UK To Address Marketing Of High Risk Crypto Investments

British financial watchdog says it will curb the marketing of cryptoassets and other high-risk investments,…

21 hours ago

Tesla Driver Charged With Manslaughter After Autopilot Crash

Criminal charges for the first time in fatal crash involving Tesla's Autopilot, as driver is…

23 hours ago