SAP cuts hiring and travel to fund AI

SAP is limiting hiring and travel spending to help pay for its AI transformation.

The tech giant will “exclusively focus new hiring on selected profiles only, mainly core Al roles, that are critical for our long-term success,” staff were reportedly told in an internal email.

The email also said that internal travel, unless it is related to AI development, will be suspended, and that the company is looking at ways to cut other spending with suppliers, Bloomberg reported.

An SAP spokesperson confirmed the report, telling CIO, “SAP continually reviews its investments to ensure resources are focused on the areas that will drive long-term customer value and innovation. As part of this approach, we are prioritizing investments in AI-related capabilities, talent, and technologies while applying greater discipline to hiring, external spending, and internal travel. Customer-facing activities and critical AI initiatives remain fully supported.”

This is yet another part of the SAP’s efforts to accelerate its focus on AI, including its digital assistant, Joule. Earlier this week, CEO Christian Klein took on direct responsibility for most of its AI development teams. In March, Klein had passed oversight of sales, delivery, service, and support to the new Customer Value Group under executive board member Thomas Saueressig, now chief customer officer.

Customers need to see value

Terra Higginson, principal research director at Info-Tech Research Group, said that while SAP needs AI adoption to support its strategy and justify its investments, “customers still need to see a clearer value proposition before they commit more budget or operational attention.”

Like many software companies, SAP is facing multiple pressures, she said: SaaS valuations remain significantly below prior-cycle highs, AI is expensive to build, operate, and scale, and the commercial payoff from AI remains uncertain.

“This is not a time for lavish spending,” she said. “SAP needs to be disciplined about where it invests, focusing on areas that create clear competitive differentiation. Joule has been underwhelming so far, yet I hear that SAP is pushing users hard to turn it on. That creates a real tension.”

Reshaping the workforce

AI is also behind SAP’s attempt to avoid layoffs like those that occurred during its 2024 restructuring. The company is encouraging employees to invent “more valuable jobs,” assisted by the new technologies, The New York Times reported. The report said that in the not too distant future, CEO Klein is expecting to see not a smaller workforce, but a very different one; he is not sure whether there will be any people coding software in two or three years.

Jason Andersen, VP and principal analyst at Moor Insights & Strategy, said that when workers use AI a lot, it changes how they interact with their daily tasks. For example, software engineers are now doing more security and testing tasks as their time is freed up from coding.

“But, this rebalancing of work is the big challenge that hasn’t been worked out yet,” he said. “That is the missing link in this whole future-of-work story and how that translates to today’s worker. And that has three major mitigating factors that at least temporarily disrupt good intentions.”

First, he said, AI tends to be a personal productivity enhancer and is not yet team friendly. Second, “There’s an argument that AI will enable us to be so much more productive since we can now do those things that we could not before. Except that those things never really had a strong enough case to begin with. So, will we use this new capacity to do that or just cut the budget?”

And thirdly, he pointed out, “macro views get sorted out in years and decades, not months and quarters. AI will change jobs, and, if you believe the research suggesting automation actually increases the number of jobs over time (which I do), it will work itself out.”

SAP and other companies must do these things to stay competitive over the long run, he said, but, “In the short run, a lot of companies will have to scale back to move forward, which is of little consolation to those impacted.”