SAP freezes almost all hiring with immediate effect as it pushes ahead with AI
European software giant SAP has put a freeze on all non-AI roles with cuts on travel spending. This move comes at a time when the company is aggressively pushing towards AI development.
Artificial intelligence is changing the world as we speak, and the software industry is arguably facing greater impact than some other areas. European software giant SAP is now evolving in the age of AI with a freeze on almost all hiring, and restricting non-essential travel. The company plans to redirect the money saved from this move into AI investments.
As per a report from Bloomberg, SAP executives sent an internal memo to employees on Wednesday. The memo stated that the company was going to “exclusively focus new hiring on selected profiles only, mainly core Al roles, that are critical for our long-term success.” That is, SAP was freezing hiring of all non-AI related roles. This decision comes just days before SAP’s second-quarter results are set to be released, July 23.
At the same time, the company announced that it was pausing all travel unrelated to AI development, and was also looking for further savings from suppliers.
SAP is said to have a global workforce of around 1,10,000 employees, with its Indian operations accounting for roughly 15,000 workers.
Why is SAP freezing non-AI hiring?
In the memo, the SAP board describes the move as a direct trade-off as the company pushes towards AI development. The executives stated, “As AI reshapes the future of our industry, we are making significant investments. By balancing where we invest and where we save, we ensure that SAP remains strong, competitive, and well-positioned for the long term.”
The cost curbs are being rolled out alongside a broad leadership reset as chief executive Christian Klein pushes the company further towards AI. Klein has taken direct control of AI product development under “Project Fuji” after the departure of board member Muhammad Alam.
SAP CEO expects different workforce amid hiring freeze
Klein has also spoken openly about how the shift could change SAP’s workforce. “I’m not sure if here someone in two or three years will still code software,” he told the New York Times. “I don’t expect to operate with a smaller work force, but with a very, very different work force.”
Last year, SAP’s CFO Dominik Asam said that with AI, the company could afford to have “fewer people” for the “same volume of output.” Previously, Asam also stated that SAP would cut 1 to 2 per cent of its workforce every single year.
SAP cut about 3,000 jobs in a 2023 restructuring and then launched a €2 billion cost programme in early 2024 that affected 8,000 positions. At the same time, it has since added more than 3,500 net new roles, many of them customer-facing forward deployed engineers (FDEs) working on AI solutions.
SAP’s push comes as other software groups also trim costs to free up money for AI. The same pressure has been seen across the sector, with companies trying to turn payroll and other spending into AI budgets. Companies like Oracle and TCS have laid off thousands of employees as they also invest in AI. Meta too decided to shut down 6,000 open roles it was looking to fill when it laid off 8,000 workers in May.
Artificial intelligence is changing the world as we speak, and the software industry is arguably facing greater impact than some other areas. European software giant SAP is now evolving in the age of AI with a freeze on almost all hiring, and restricting non-essential travel. The company plans to redirect the money saved from this move into AI investments.
As per a report from Bloomberg, SAP executives sent an internal memo to employees on Wednesday. The memo stated that the company was going to “exclusively focus new hiring on selected profiles only, mainly core Al roles, that are critical for our long-term success.” That is, SAP was freezing hiring of all non-AI related roles. This decision comes just days before SAP’s second-quarter results are set to be released, July 23.
At the same time, the company announced that it was pausing all travel unrelated to AI development, and was also looking for further savings from suppliers.
SAP is said to have a global workforce of around 1,10,000 employees, with its Indian operations accounting for roughly 15,000 workers.
Why is SAP freezing non-AI hiring?
In the memo, the SAP board describes the move as a direct trade-off as the company pushes towards AI development. The executives stated, “As AI reshapes the future of our industry, we are making significant investments. By balancing where we invest and where we save, we ensure that SAP remains strong, competitive, and well-positioned for the long term.”
The cost curbs are being rolled out alongside a broad leadership reset as chief executive Christian Klein pushes the company further towards AI. Klein has taken direct control of AI product development under “Project Fuji” after the departure of board member Muhammad Alam.
SAP CEO expects different workforce amid hiring freeze
Klein has also spoken openly about how the shift could change SAP’s workforce. “I’m not sure if here someone in two or three years will still code software,” he told the New York Times. “I don’t expect to operate with a smaller work force, but with a very, very different work force.”
Last year, SAP’s CFO Dominik Asam said that with AI, the company could afford to have “fewer people” for the “same volume of output.” Previously, Asam also stated that SAP would cut 1 to 2 per cent of its workforce every single year.
SAP cut about 3,000 jobs in a 2023 restructuring and then launched a €2 billion cost programme in early 2024 that affected 8,000 positions. At the same time, it has since added more than 3,500 net new roles, many of them customer-facing forward deployed engineers (FDEs) working on AI solutions.
SAP’s push comes as other software groups also trim costs to free up money for AI. The same pressure has been seen across the sector, with companies trying to turn payroll and other spending into AI budgets. Companies like Oracle and TCS have laid off thousands of employees as they also invest in AI. Meta too decided to shut down 6,000 open roles it was looking to fill when it laid off 8,000 workers in May.
