Thread regarding SAP layoffs

The first wave was just an appetizer

In 2009, SAP had 47,584 employees globally (31 Dec.) for a Total Revenue (IFRS) of 10,672 M EUR.

In 2018, SAP had 96,498 employees globally (31 Dec.) for a Total Revenue (IFRS) of 24,708 M EUR.

So in 9 years, the Revenue increased by +130% and the number of employees by +103% .

The ratio of Revenue / Employee was 224 K EUR in 2009 and 256 K in 2018, an increase of 14% over 9 years. In other words, a productivity increase of 1.5% per year.... Not a stellar performance for a software company, especially as inflation is not included... Factoring in inflation means that productivity decreased over 9 years as global inflation is higher than 1.5% yearly. At that rate, SAP needs ~136,000 employees for 35 B EUR revenue....

Where did the employee growth come from?

In 2009, EMEA had 25,362 employees, Americas had 11,974 and APJ had 10,248 as of 31 Dec.

In 2018, EMEA had 41,848 employees, Americas had 28,029 and APJ had 26,620 as of 31 Dec.

So..........EMEA grew by +65%.................Americas by +134%.....and APJ by +160%

A company that doubles employees over 9 years will automatically build fat and non-productive / redundant units and jobs. This will always end-up with "streamlining", "downsizing" (whatever the name). SAP had not faced the reality so far due to its own complacency.

I have seen a company going from 90,000 to 170,000 after M&A then 2 waves of layoffs in 1 year. Each wave was 15,000 employees. So, 30,000 employees lost their job as a result (18% of employees). This was truly traumatic for everyone.

So, SAP shed ~4,400 people in January. This is only ~5% of its workforce. Nothing exceptional from a business point of view (although traumatic for all impacted individuals). I would say there is still a lot of fat and synergies to be implemented so "brace for the next wave"....

Post ID: @YUbwwLR

7 replies (most recent on top)

Great post OP

Post ID: @YUbwwLR-2wal

Ok, let's look at Sales & Marketing (S&M) as well as Research & Development (R&D) and General & Administration (G&A). Data is straight from the annual reports and not modified.

Sales & Marketing:

In 2009, 9,513 employees. In 2018, 24,213 employees. So, an increase of 155%.

S&M expenses as a percentage of total revenue: 21% in 2009, 27.4% in 2018.

S&M expenses in M EUR: 2,199 in 2009, 6,781 in 2018. So , an increase of 208%.

Research & Development:

In 2009, 14,813 employees. In 2018, 27,060 employees. So, an increase of 83%.

R&D expenses as a percentage of total revenue: 15% in 2009, 14.7% in 2018.

R&D expenses in M EUR: 1,591 in 2009, 3,624 in 2018. So, an increase of 128%.

General & Administration

In 2009, 3,051 employees, In 2018, 6,024 employees. So an increase of 97%.

G&A expenses as a percentage of total revenue: 5% in 2009, 4.4% in 2018.

G&A expenses in M EUR: 564 in 2009, 1,098 in 2018. So, an increase of 95%.

Post ID: @YUbwwLR-1vtq

Thanks for the analysis.

Another interesting growth is Sales & Marketing versus Development positions.

The Euro to USD exchange rate also influenced the revenue growth as the exchange rate declined from approx 1.45 to 1.15:1 during this period.

Post ID: @YUbwwLR-1ihm

Data is taken straight from the annual report and is not modified.

For 2018, see page 76 of the SAP 2018 Integrated report. SAP Group has 96,498 employees as of 31 December. Thereof acquisitions 2,043.

About attrition, page 74 of the same report says: "Our overall retention rate in 2018 was 93.9% compared to 94.6% in 2017. We define retention as the ratio of the average number of employees minus the employees who voluntarily departed, to the average number of employees (in

full-time equivalents or FTEs)."

In other words, 5,716 employees voluntarily departed in 2018...

Post ID: @YUbwwLR-1qyt

Did u add the employees that were hired from original acquired companies and see how much attrition there was?

Post ID: @YUbwwLR-1hwq

Thank you for the great analysis. I am not a business/economic expert but these numbers seem to make sense to me (please excuse my ignorance). The CFO or his team must be able to challenge these facts and figures so feedback from the team would be greatly appreciated.

Brace yourself for the next waves and hopefully this time around they will cut the real fat (wishful thinking ..)

Post ID: @YUbwwLR-fjx

Such a great post.

Thanks for the break down, this is very informative.

Post ID: @YUbwwLR-adu

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