IBM and SAP have joined a slew of other tech behemoths in laying off thousands of workers in response to a slowing global economy and waning demand for some digital services.
On Wednesday, IBM announced the layoffs of 3,900 employees, or 1.5% of its global workforce. According to an earnings report released Thursday, SAP, Europe’s largest software company, will lay off 2.5% of its global workforce of 112,000, or approximately 2,800 employees.
SAP CEO Christian Klein stated that the “targeted” cuts will allow the company to invest in areas “where it really matters for SAP to be competitive in the future,” specifically its cloud business, while dealing with the effects of a slowing global economy.
In an interview with CNBC last week, Klein stated that the company is “in a very strong position” and will avoid layoffs.
IBM and SAP make moves as 2022 earnings are released.
The layoffs occur on the same day that both companies report earnings for the fourth quarter of 2022.
“Our solid fourth-quarter performance capped a year in which we grew revenue above our mid-single digit model. “As technology continues to be a differentiating force in today’s business environment, clients across all geographies have increasingly embraced our hybrid cloud and AI solutions,” said Arvind Krishna, IBM chairman and CEO, in a statement. “Looking ahead to 2023, we anticipate full-year revenue growth in the mid-single digits.”
Among the highlights of IBM’s fourth quarter were:
Revenue was flat at $16.7 billion.
Revenue from software increased by 3%.
Consulting revenue increased by 0.5%.
Revenue from infrastructure increased by 2%.
According to the company’s release, full-year highlights included revenue of $60.5 billion, a 6% increase.
SAP ended 2022 “with continued strong cloud momentum and a return to operating profit growth in the fourth quarter, marking an important inflection point,” Klein wrote on Wednesday.
“This gives us great confidence heading into 2023 in delivering on our promise of accelerating topline and double-digit non-IFRS operating profit growth,” Klein added.
According to SAP’s year-end earnings, cloud revenue increased 33% in fiscal year 2022. The company also announced that it was considering selling its stake in Qualtrics, a software company based in the United States.
Google, Amazon, Spotify, Microsoft, and others have all announced layoffs.
Spotify announced on Monday that it would lay off 6% of its workforce.
Amazon began laying off thousands of employees last week. Amazon CEO Andy Jassy announced 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.”
New layoff notices for approximately 8,000 employees were issued last week, just months after an initial round of 10,000 job cuts.
Microsoft also announced 10,000 job cuts last week, accounting for nearly 5% of its workforce. In November, Facebook parent Meta announced 11,000 job cuts, or 13% of its workforce.
The NYSE stock (IBM)
In early Thursday trading, IBM’s stock on the New York Stock Exchange fell more than 4%.
The NYSE stock (SAP)
SAP’s stock on the New York Stock Exchange fell more than 1.5% in early trading Thursday.