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SAP to Cut 3,000 Jobs

January 30, 2009
Related Topics: Career Development, Downsizing, Employee Career Development, Workforce Planning, Latest News
HR software giant SAP has joined the ranks of companies cutting jobs amid the deepening recession.

Walldorf, Germany-based SAP on Wednesday, January 28, said it planned to trim 3,000 employees, or about 6 percent of its global workforce, by the end of the year.

SAP and archrival Oracle are the two biggest sellers of software to manage human resources tasks such as payroll and recruiting. Asked how the cuts will affect SAP’s HR software business, company spokeswoman Lindsey Held said SAP had no “specific group targets” or percentages. “We can say only that the actions will be global,” Held said in a statement Thursday, January 29. “We are examining our business operations to take prudent actions.”

SAP is the latest major firm to announce significant job cuts in recent weeks. Others include software maker Microsoft, equipment manufacturer Caterpillar and imaging specialist Eastman Kodak Co.

The economic downturn has led a record number of people to seek jobless benefits. For the week ending January 17, continued claims—that is, the number of people requesting a weekly benefit check after having established eligibility—was 4.78 million. The figure is the highest on record dating back to 1967.

HR software has been among the fastest-growing categories of business software, but it is unclear how spending is holding up amid the recession. SAP is not the first vendor of HR applications to cut jobs. Waltham, Massachusetts-based Authoria said last year that it cut an unspecified number of positions. In addition, an equity analyst wrote late last year of job cuts at vendor SuccessFactors.

SuccessFactors declined to comment.

SAP announced its workforce reduction as it disclosed revenue growth of 13 percent and a 2 percent drop in net income for 2008. The company also said it will continue tight cost controls on variable expenses and capital expenditures.

SAP expects the job cuts to provide $388 million to $453 million in annual cost savings beginning in 2010.

“We believe the cost containment measures will allow us to adapt to the tough market conditions and ensure the long-term competitiveness of the company,” Léo Apotheker, co-CEO of SAP, said in a statement. “Moreover, we expect 2009 to be a year of limited visibility, making it increasingly difficult to project sales in this environment.”

Apart from the headcount cut disclosed Wednesday, SAP eliminated slightly more than 200 positions in the U.S. and Canada in December and earlier this month, Held said. She said those cuts stemmed from SAP’s integration of Business Objects, a software firm it acquired early last year.

SAP rival Oracle did not immediately respond to a question about whether it might cut jobs because of the recession. As of November 30, Oracle had 86,657 employees, up from 79,649 a year earlier.

—Ed Frauenheim

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