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SAP will slash 3,000 positions and consider selling a stake in Qualtrics.

As the German software major SAP tries to slash expenses and concentrate on its cloud business, it announced on Thursday that it intends to eliminate 3,000 employees, or 2.5% of its global workforce, and consider selling its remaining investment in Qualtrics.

After firms like Alphabet Google, Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN) announced thousands of layoffs to cut expenses as they prepared for more challenging economic conditions, SAP is the latest tech company to do so.

Chief Financial Officer Luka Mucic stated in a conference call with journalists that “we foresee only a minor cost saving impact for 2023 and a more noticeable one in 2024, roughly 300 million to 350 million in run rate savings as of 2024.”

The corporation will lay off a little more than 200 employees in Germany, where SAP is based.

The layoffs follow SAP’s fourth-quarter cloud business earnings report, which showed a 30% revenue rise aided by robust software demand.

The sale of SAP’s interest in Qualtrics has also begun. It acquired the business in 2018 for $8 billion, and in 2021 it went public with a valuation of approximately $21 billion.

Qualtrics, a provider of survey software, is currently valued at $7 billion, and SAP owns a 71% interest.

The sale would generate a sizable one-time gain, according to Mucic. “This would significantly improve SAP’s profitability, but it is not currently included in the outlook.”

According to SAP, this year’s core operating profit will be between 8.8 and 8.9 billion euros at constant currencies. Additionally, it anticipates that cloud revenue will increase from 12.56 billion euros in 2018 to 15.3–15.7 billion euros in 2023, at constant currencies.

While analysts had expressed concern that SAP’s profitable cloud business would suffer if other businesses cut their expenses as a result of the uncertain economy, SAP has been gaining new clients.

According to Chief Executive Christian Klein, “We are going to unveil a unique strategic collaboration with BMW betting on SAP on all dimensions—oone of the greatest partnerships ever—which was signed yesterday.”

($1 = 0.9159 euros)

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