SAP freezes hiring to fund AI push amid share price slide
Europe’s largest software company is diverting resources away from general recruitment and travel toward artificial intelligence, a high-stakes gamble to defend its market position as investors question the company's traditional revenue model.
SAP is freezing most hiring and pausing non-essential travel to free up cash for artificial intelligence, confirming the move after an internal memo circulated on Wednesday evening. The German software giant will now “exclusively focus new hiring on selected profiles only, mainly core AI roles,” while also squeezing supplier spending. Customer-facing work and critical AI projects will remain fully funded.
“As AI reshapes the future of our industry, we are making significant investments,” the executive board wrote in the memo. “By balancing where we invest and where we save, we ensure that SAP remains strong, competitive, and well-positioned for the long term.”
The urgency reflects mounting pressure across the software sector to turn payroll into AI budgets. Oracle is shedding tens of thousands of jobs to pay for AI data centres, while Salesforce and Microsoft have implemented their own cost-cutting measures. For SAP, the pivot comes as its shares have fallen roughly 33 per cent this year on fears that AI will erode demand for its traditional software. The stock slipped as much as 2.2 per cent in Frankfurt on the news before recovering.
A costly transition
CEO Christian Klein has spent the year reorganising the company around AI, including a second top-level shake-up this week that handed more oversight to him and his operating chief. The company is also trying to buy in expertise, though it recently lost out on acquiring Cognite, an industrial-AI firm, to Schneider Electric in a $3.1 billion deal.
These investments layer fresh caution on top of an ongoing restructuring. Last year, SAP completed a €3 billion overhaul that cut 10,000 jobs, and its finance chief indicated the company will continue trimming 1 to 2 per cent of staff annually.
The central challenge is whether customers will actually pay for the resulting tools. More than 90 per cent of the Fortune 500 rely on SAP, yet many are still struggling through slow and expensive migrations from on-premise servers to the cloud. That legacy transition directly competes for the very budgets SAP now wants clients to spend on its new AI features, leaving Europe’s software champion with a clear but unproven bet.
