Due to the deteriorating global economic outlook and declining demand for some digital services, IBM and SAP have joined a number of other tech giants in laying off thousands of workers.
On Wednesday, IBM revealed it would be eliminating 3,900 jobs worldwide, or 1.5% of its workforce. According to an earnings report released on Thursday, SAP, Europe’s largest software company, will lay off 2.5% of its global workforce of 112,000, or about 2,800 employees.
Christian Klein, CEO of SAP, has stated that the “targeted” cuts will allow the company to invest in the areas “where it really matters for SAP to be competitive in the future,” specifically its cloud business, despite the fact that the company is facing pressures from a slowing global economy.
The earnings report for 2022 has IBM and SAP making changes.
Both businesses have announced layoffs on the same day they have released financial results for the fourth quarter of 2022.
“The strong finish we had in the fourth quarter capped off a year in which we grew revenue by more than double the rate we had projected. As technology continues to be a differentiating factor in today’s business environment, clients from all over the world have shown a growing interest in our hybrid cloud and AI solutions “IBM’s CEO and chairman, Arvind Krishna, issued a statement. For the full year of 2023, we anticipate revenue growth in the mid-single digits.
Some of IBM’s most notable achievements in the fourth quarter were:
- A flat $16.7 billion in sales.
- 3 percent growth in software sales
- Growth of 0.5% in consulting income
- A 2% increase in infrastructure revenue
The company reported in its release that the full-year highlights also showed revenue of $60.5 billion, which was a 6% increase.
Klein wrote on Wednesday that SAP finished 2022 “with continued strong cloud momentum and a return to operating profit growth in the fourth quarter, marking an important inflection point.” Klein was referring to the fact that SAP experienced growth in their operating profits in the fourth quarter.
“This gives us great confidence in delivering on our promise of accelerating top-line and double-digit non-IFRS operating profit growth,” Klein continued. “Heading into 2023, this gives us great confidence in delivering on our promise.”
The cloud segment contributed 33 percent more revenue to SAP’s bottom line during the fiscal year ending in 2022. The business also disclosed that it was considering selling its stake in the software company Qualtrics, which is based in the United States.
The likes of Google, Amazon, Spotify, Microsoft, and others have all recently announced layoffs.
On Monday, Spotify made the announcement that it would be eliminating 6% of its current workforce. Beginning the previous week, Amazon started firing thousands of its employees. Amazon’s Chief Executive Officer, Andy Jassy, made the announcement on January 4 that the company planned to lay off more than 18,000 workers “between the reductions we made in November and the ones we’re sharing today.”
Just a few short months after the first round of job cuts, which totaled 10,000, new layoff notifications were sent out to approximately 8,000 employees last week.
Also during the past week, Microsoft made the announcement that it would be cutting nearly 5% of its workforce, or 10,000 jobs. In November, Facebook’s parent company, Meta, announced that it would be eliminating 11,000 jobs, which is equivalent to 13% of its workforce.