IBM and SAP to cut thousands of jobs in latest tech sector layoffs

Ibm And Sap To Cut Thousands Of Jobs In Latest Tech Sector Layoffs Ibm And Sap To Cut Thousands Of Jobs In Latest Tech Sector Layoffs
IBM on Wednesday announced 3,900 layoffs. Photo: David Ramos/Getty
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By Kirsti Knolle and Supantha Mukherjee, Reuters

Computing firm IBM and German software company SAP, two major employers in Ireland, plan to cut their global workforces in the latest round of tech sector layoffs.

IBM on Wednesday announced 3,900 layoffs as part of some asset divestments.

Chief financial officer James Kavanaugh told Reuters that the company was still "committed to hiring for client-facing research and development".

The layoffs – related to the spinoff of its Kyndryl business and a part of AI unit Watson Health – will cause a $300 million charge in the January-March period, IBM said.

Meanwhile, SAP said on Thursday it planned to cut 3,000 jobs, or 2.5 per cent of its global workforce, and explore the sale of its remaining stake in Qualtrics, as the Germany software company looks to cut costs and focus on its cloud business.

SAP is the latest tech company to cut jobs after companies including Alphabet's Google, Microsoft and Amazon announced thousands of layoffs to cut costs as they brace for tougher economic conditions.


"We expect only a moderate cost saving impact for 2023, and a more pronounced one in 2024, about 300 million euros to 350 million in run rate savings as of 2024," chief financial officer Luka Mucic said in a call with journalists.

In Germany, where SAP is headquartered, the company will cut slightly more than 200 jobs.

The layoffs come after SAP reported a 30 per cent revenue increase in its cloud business in the fourth quarter, helped by strong demand for its software.

SAP has also started the process to sell its stake in Qualtrics. It bought the company for $8 billion in 2018 and took it public in 2021 at a valuation of nearly $21 billion.

Currently, survey-software seller Qualtrics has a market value of $7 billion and SAP has a 71 per cent stake.

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"[The sale] would result in a quite significant one-time gain," Mucic said. "This would materially increase the profit performance of SAP, but it's currently not reflected in the outlook."

SAP forecast core operating profit of €8.8-€8.9 billion at constant currencies for this year. It also expects cloud revenue at constant currencies for 2023 to rise to €15.3-€15.7 billion, from €12.56 billion last year.

While analysts had raised concerns that SAP'S lucrative cloud business might take a hit with other companies tightening their budgets due to economic uncertainty, SAP has been signing more customers.

"We are going to announce a unique strategic partnership with BMW betting on SAP on all dimensions - one of the biggest deals ever, which was signed yesterday," chief executive Christian Klein said.

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