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The software giant is the latest big tech player to announce major job cuts in 2023.

German software vendor SAP announced it plans to cut 3,000 jobs, or 2.5 percent of its global workforce, according to reporting by Reuters. The company also told reporters that it plans to explore the sale of its remaining stake in Qualtrics. Both moves are motivated by SAP’s plan to cut costs and focus on its cloud business, Reuters said.

SAP is the latest tech company to cut jobs after US giants like Google’s parent Alphabet, Microsoft and Amazon announced thousands of layoffs in an attempt to reduce costs and brace for more challenging economic conditions in the coming year.

SAP Chief Financial Officer Luka Mucic managed expectations in a call with journalists. “We expect only a moderate cost-saving impact for 2023, and a more pronounced one in 2024, about 300 million euros to 350 million in run rate savings as of 2024.” The company will cut slightly more than 200 jobs in its home country of Germany.

The layoffs come after SAP reported a 30 percent revenue increase in its cloud business in the fourth quarter. The company attributed the growth to strong demand for its software.

Qualtrics on the selling block

The company also started the process of selling its stake in Qualtrics, Reuters reported. SAP bought the company for $8 billion in 2018 and took it public in 2021 at a valuation of nearly $21 billion.

Qualtrics, which sells experience management software, currently has a market value of $7 billion. SAP holds a 71 percent stake.

CFO Mucic said that the Qualtrics sale “would result in a quite significant one-time gain” and “materially increase the profit performance of SAP”. He added that such a profit increase was “currently not reflected in the outlook”.

The Reuters report notes that analysts have raised concerns that SAP’s lucrative cloud business may take a hit with other companies tightening budgets due to economic uncertainty. That downturn has not yet happened, however, and the software powerhouse has actually been signing more customers.

SAP CEO Christian Klein gave an example of the positive results the company has seen lately. “We are going to announce a unique strategic partnership with BMW betting on SAP on all dimensions – one of the biggest deals ever, which was signed yesterday”, he said.