SAP layoffs, January, 2009

SAP co-CEOs Henning Kagermann and Leo Apotheker this morning issued an open letter announcing a layoff of 3000 employees, or 5.8% of SAP's workforce:

The global economic crisis forces us to take further actions to help SAP successfully weather the current challenges and emerge stronger. We have just published our preliminary Q4 and Year End 2008 financial results as well as our outlook for 2009. Despite the dramatically deteriorating market conditions since September, we have achieved good results for the entire year. This has only been possible because of the remarkable efforts of all employees, and we would like to express our gratitude to all of you for this. Unlike in past years, which were characterized by double-digit growth rates, the outlook for 2009 is completely different. For this reason, we will have to intensify our cost-savings efforts by implementing additional measures.

After an exhaustive and thorough evaluation of all options, we have concluded that a reduction in the number of persons employed is necessary. This is not an easy step for us to take, and we are fully conscious of the implications of this decision.

As SAP is a global company, we will consider each region and each line of business at all levels. We are looking for fair solutions according to accepted practice, and we will make this process as transparent as possible. We owe this to our employees. We plan to reduce the number of positions globally from 51,500 to 48,500, taking full advantage of attrition as a factor to reach this goal. In countries with employee representatives we have initiated contact with the relevant employee representative bodies. This should enable us to decrease the annual personnel costs by 300 - 350 million euros in subsequent years. As long as the specific regional legal conditions permit, there will not be a salary round in 2009.

SAP is to be commended for openly announcing this this reduction in force, along with its intentions for the coming year. This is in contrast to Oracle's practice in layoffs of doing as much as possible without public disclosure, which simply fuels the rumor mill and creates uncertainty among its workforce.

The current action follows a smaller layoff earlier this month in which SAP appears to have let go a smaller number of employees. It's not clear whether those cuts are included in the 3000 number indicated today.

I knew something was up this morning when I check the Spectator's logs and found a surge in Google referrals for "SAP layoffs."

If you have insights on SAP's current action, please email me or leave a comment on this post.

Update: Dennis Howlett has insights on SAP's financial situation, which he thinks is an opportunity for SAP to recharge its Business ByDesign SaaS offering.

Update: A friend, who partners with SAP sales folks in new deals, writes to me and then follows up with a phone call to complain about turnover among SAP sales people, even before the current layoffs. He says that they tend to get moved around a lot, making it difficult for local partners to invest in relationship building. In his view, the current layoffs have just exacerbated this situation.