August 4, 2017 / 1:22 PM / 4 months ago

SAP says restrictions on new recruitment not a general hiring freeze

FRANKFURT (Reuters) - German business software company SAP denied a media report on Friday that said it has imposed a complete freeze on recruitment in order to meet financial targets this year, while reiterating that it had restricted new hirings in some areas.

FILE PHOTO: SAP headquarters in Walldorf, Germany, January 24, 2017. REUTERS/Ralph Orlowski/File Photo

Business magazine WirtschaftsWoche said on Friday that SAP had instituted a cost-savings program to control infrastructure spending, corporate purchasing and business travel that was not tied directly to generating sales.

SAP continued to hire new employees in development and sales while reining in on other types of recruitment as well as non-essential travel, the company said. “This is in no way a general hiring freeze,” an SAP spokesman said.

WirtschaftsWoche said it obtained a leaked document, marked “strictly confidential” spelling out SAP’s plan, which it said had been decided on July 15 by the company’s executive board.

During its quarterly investor call in July Chief Financial Officer Luka Mucic said SAP would hold back on incremental hiring after increasing its overall workforce by 3,000 in the first half of 2017 and 7,000 in the past year to 87,114 in June.

He was seeking to reassure investors after the company reported rapid revenue growth in the second quarter but fell shy of profit forecasts as internal expenses and employee stock option costs contributed to a 27 percent drop in operating profits.

“So we now have a situation in which we believe that we have, for the moment, everything that we need to drive and scale this business and that should help us in the second half-year,” Mucic said, referring to how this would help SAP control costs.

SAP’s global workforce increased by 9 percent in the 12 months to end-June compared with percentage rises in the mid-single digits late in 2015 and early 2016, according to company financial reports.

SAP has indicated that the heavy investments it has been making in internet-delivered cloud services and datacentres can begin to yield sustainable double-digit percentage growth rates for operating profits in the coming years, up from current mid- to high-single-digit rates.

Reporting by Eric Auchard; Editing by Greg Mahlich

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