Back in Oct 2008, I had heard some rumors/clues about Layoffs in Oracle, Microsoft and SAP from my promising sources. Now it seems like the rumors about serious Layoffs in January 2009 were not just rumors. Only last week Microsoft announced to layoff some H1-B visa holders in order to reduce it’s costs and overall expenses. Oracle was in news too for its’ layoffs earlier this week.
SAP has announced Layoffs
Finally the news from SAP Arena is out too, SAP has also announced to layoff 3000 employees in an open letter issued by SAP’s CEO Henning Kagermann along with SAP’s co-CEO Leo Apotheker on last Wednesday. This is almost 5.8% of SAP’s total workforce, I guess.
As per the letter:
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.
Despite looking resilient in jan 2009 SAP took a precautionary step to mitigate risks associated to it’s overall sales and business expansion. SAP had also freezed, further recruitments or replacements four months back and pink slipped contract and temporary employees. So far it is not clear, if the number of employees who were layed off earlier are included in 3000 or not. There was a rumor going on in the first week of January 09 about cost cutting in SAP’s Strategic Growth Enterprise (SGE) unit (focused on the SMB space). Now it seems like the results are coming of earlier rumors. ”I think SAP has reacted proactively on the basis of economic growth rate and forecasts, SAP has taken a precautionary step in hope of saving ($397.5 million-$463.7 million) in subsequent years”
During morning trade in Frankfurt SAP seems to be able to win investor confidence by a timely disclosure and precautionary step taken. (nyse: SAP – news – people ) up 6.5%, or 1.69 euros ($2.24), to 27.91 euros ($36.98)
As per a Forbes news published this morning, Jochen Klusmann an analyst with BHF Bank said “SAP was fully exposed to the weak environment in the fourth quarter “He recommended buying into the company. He said that SAP’s guidance implied a drop of around 50.0% in comparable software license sales for 2009, or far worse than the 15.0%-20.0% estimated drop for the final months of 2008. In other words, short of a fresh economic disaster, SAP might not find it hard to reach its target. Theo Kitz, an analyst with Merck Finck said “I think that guidance could be beaten,” he also recommended buying SAP. Although he admitted that it was very difficult to predict how customers would behave during the widespread downturn.
So far, I remember there was no such news ever about layoff in the history of sap, This is certainly not an easy decision for the management. I just hope that we overcome this situation soon. Now is the time to raise the bar, by demonstrating innovation and establishing organizational standards.
I think, the key mantra of success in context to today’s situation is to individually think and react on how to gain more by spending less and yet achieving the acceptable standards of quality and enriching excellence.
This is really a truly good learn for me, Need to admit that you are one of the best bloggers I ever noticed.Thanks for posting this informative write-up. But am sure nowadays SAP is not looking for any more layoffs..
I am one of the sufferers of this unjustified lay –offs. Definitely the performance evaluation are totally prejudiced and irrational. TCS and Infosys have given open statement on the lay-offs. But interestingly ***** couldn’t give a statement. Since last 8 months wipro had secretly laid off 16000 employees and the number is still increasing. The TED (Talent Engagement and Development) behaves in an uncivilized way with the employees, just to embarrass them to resign on their own. They find ways and means to terminate employees. This is a very harsh treatment to educated Professionals. So ***** HR is in the process of Talent Destruction activity. Can anyone guess who has given ***** HR to undertake this activity. In the process they have committed blunders. Is the cuprit ##### or ##### or some Insider? If the ***** top leadership doesn’t wakeup to all these blunders by Wipro HR, there would be insurgency among the affected Professionals.
I request the aspirants of making up a career not to join ***** and ruin their life.
I request the victims of this unjustified lay-offs to unite and do campaigning against *****.
I think may be you should check with the HR if the layoff is of type termination or is it a temporary layoff. In many companies layoffs can range from a period of a week to an indefinite amount of time, the company layoff may not be the same as termination. Companies choose to implement layoffs because there is a reasonable expectation of needing to reactivate the laid off employees at a future date.
In states that allow laid off employees to draw unemployment compensation during the company layoff, it is not unusual for the company to take the necessary steps to prepare the applications and other paperwork on behalf of the employees. This helps to ensure that there is some amount of revenue generated for the employees during the period of the layoff, and can act as an incentive for the laid off employee to not seek permanent employment elsewhere. I am not sure about WIPRO but I would suggest to check that out once again with the HR.