Germany’s SAP (SAPG.DE) is proving that artificial intelligence (AI) is creating room for more job cuts in tech. The $190 billion software company, which counts chipmaker Nvidia (NVDA.O) as a key client, announced on Tuesday it will cut 8,000 jobs – or 7% of its global workforce – because deep learning algorithms are allowing its staff to do more tasks, and quicker. CEO Christian Klein says AI can enable faster coding, contract checking, sales pitches and more, reducing the number of needed employees.
The restructuring, which is larger than SAP’s previous job-cutting plan announced in January 2023, will cost 2 billion euros ($2.2 billion), making room for new investment in areas from IT to automation to feed growth in artificial intelligence-related businesses. Investors pushed shares up 6% on the announcement, even though SAP expects net savings to be just 0.5 billion euros in 2025. SAP’s move may herald more job cuts in a segment that is already downsizing. Many tech companies over-hired during the peak of a pandemic recovery in 2021, leading to over 400,000 job cuts in 2022 and 2023, per website layoffs.fyi. As the global economy slows and the buzz around AI gets stronger, IT workers look increasingly vulnerable. (By Yawen Chen)
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