Cisco to Slash Thousands of Jobs in Second Round of Layoffs
Cisco Systems plans to let off thousands of employees this year as it turns its attention to higher-growth sectors.
Cisco Systems, the U.S.-based networking equipment giant, is set to cut thousands of jobs in a second round of layoffs this year as the company shifts its focus to higher-growth areas such as cybersecurity and artificial intelligence (AI).
Sources familiar with the matter, who were not authorized to speak publicly, indicated that the number of employees affected could be similar to or slightly exceed the 4,000 laid off in February.
The announcement is expected as early as Wednesday, coinciding with the company’s fourth-quarter results. Cisco had previously announced the February layoffs, which Reuters exclusively reported before the official company statement.
Employee Impact:
According to its annual filing, Cisco employed approximately 84,900 people as of July 2023, a figure that does not include the February layoffs. The latest round of job cuts reflects the broader trend in the tech industry, where firms are reducing costs to offset significant investments in AI.
Cisco Market Performance:
Cisco’s shares fell nearly 1% after Reuters first reported the upcoming layoffs. As of Thursday’s close, the stock was down over 9% for the year. The company, known as the largest maker of routers and switches that direct internet traffic, has faced sluggish demand and supply-chain constraints in its core business.
Strategic Shifts and Acquisitions:
To mitigate these challenges, Cisco has been diversifying its business. Notably, the company completed a $28-billion buyout of cybersecurity firm Splunk in March. This acquisition aims to reduce Cisco’s reliance on one-time equipment sales by bolstering its subscription-based business.
In addition to cybersecurity, Cisco has been integrating AI into its offerings. In May, the company reiterated its goal of reaching $1 billion in AI product orders by 2025. In June, Cisco launched a $1-billion fund to invest in AI startups, including Cohere, Mistral AI, and Scale AI. The company has made 20 AI-focused acquisitions and investments over the last several years.
Industry-Wide Trends:
Cisco’s layoffs are part of a larger wave of cost-cutting measures across the tech industry, driven by the need to balance large AI investments. According to data from the tracking website Layoffs, FYI, more than 126,000 employees have been laid off across 393 tech companies since the start of the year.
Earlier in August, chipmaker Intel cut over 15% of its workforce, amounting to some 17,500 employees, as it worked to turn around its money-losing manufacturing business.
