29 days ago • 2 mins
What’s going on here?
German software giant SAP seemed to find a shortcut leading to a more efficient business, and it involves laying off 8% of its staff.
What does this mean?
SAP made its name by developing software for businesses. So really, it would’ve been a glaring oversight if the firm hadn’t realized that AI software tools could help transform its own books. The German giant is expected to cut some 8% of its staff this year, a bid to free up funding for AI-focused initiatives. That said, SAP plans to keep its workforce at roughly today’s scale over the long term, building up specific departments while shrinking others. And the company seems confident, pulling its 2025 profit outlook up above market expectations.
Why should I care?
For markets: eBay’s big bid.
Usually it’s disgruntled employees deciding to ditch their workplaces at the start of the year, but just like SAP, Alphabet, Amazon, and BlackRock have already flipped the script with layoffs this month. Citigroup, too, expects to slash 20,000 jobs by the end of 2026, while Macy’s has planned to trim 3.5% of its employees this year, not counting seasonal staff. Online retailer eBay is predicted to let go of 9% of its full-time workers, as well, a result of tough competition from long-established household names Amazon and Walmart and emerging Chinese rivals Temu and Shein.
Zooming out: America is changing.
The Federal Reserve has cited the strong job market as a reason against making hasty interest rate cuts. After all, if the economy can hold its own without them, the central bank might as well squeeze inflation that little bit more. But if companies swap staff for AI faster than anticipated, the central bank may need to reconsider. That would bode well for the stock market: lower rates improve stocks’ valuations and make it cheaper for companies to reinvest in themselves.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.