SAP halts hiring and travel to support its AI initiative.

      Europe's largest software company is tightening its expenditures to pursue advancements in artificial intelligence. SAP is instituting a hiring freeze for most positions and suspending non-essential travel in order to allocate more funds for its AI initiatives.

      This plan was communicated to employees in an internal email on Wednesday evening. Bloomberg viewed the memo, and SAP confirmed the decision to The Register. From now on, the company will “focus new hiring exclusively on selected profiles, primarily core AI roles.” Non-AI related internal travel will be paused, and SAP will also reduce spending with suppliers.

      The rationale is straightforward: "As AI transforms the future of our industry, we are making substantial investments,” the executive board stated. “By balancing our investment and savings, we ensure that SAP remains robust, competitive, and well-positioned for the long term.” A spokesperson emphasized that work involving customers and essential AI projects will continue to be fully financed.

      SAP is not the only company feeling the pressure. Competitors offering software subscriptions have been cutting costs for the past two years. Oracle is eliminating tens of thousands of jobs to fund AI data centers. Salesforce is encountering similar pressures, while Microsoft has rebranded layoffs as attractive benefits. The trend is consistent: converting payroll into an AI budget.

      A shift in focus towards AI

      CEO Christian Klein has been steering SAP in the direction of AI throughout the year. This week saw the second major leadership change in 2026, with increased AI oversight assigned to Klein and his chief operating officer. In May, SAP introduced its “Autonomous Enterprise” concept and a Business AI Platform, which includes tools like Joule Studio for developing AI agents.

      The urgency is reflected in the stock price. SAP shares have declined approximately 33 percent this year due to concerns that AI may reduce demand for its conventional software. The stock fell further on the news, dropping as much as 2.2 percent in Frankfurt before regaining some ground.

      Acquisitions that don’t always succeed

      Part of the AI budget is allocated for acquisitions, but SAP hasn't always succeeded in these endeavors. This week, it lost out to Cognite, an industrial-AI and data company that secured a $3.1 billion deal with Schneider Electric. For a company eager to quickly acquire expertise, such near misses are particularly disappointing.

      There’s precedent for this as well. Last year, SAP concluded a restructuring process that cost over €3 billion and resulted in 10,000 job reductions. The finance chief has indicated that the company will continue to cut 1 to 2 percent of its staff annually. The new freeze adds an extra layer of caution to this trend.

      The customer dilemma

      A key question arises: is the investment in AI worthwhile at this stage? Some customers and partners have expressed skepticism about the value of SAP's initial AI tools. More than 90 percent of Fortune 500 companies use SAP, and most are still in the process of migrating their systems from on-premise servers to the cloud. This transition is slow and expensive and competes for the budgets SAP wishes to allocate towards AI. For Europe's software leader, the strategy is clear, but the results are yet to be seen.