Cisco is set to implement a second round of layoffs this year, targeting thousands of employees as the company shifts its focus towards higher-growth sectors like cybersecurity and AI. This move follows a previous round of layoffs in February, where 4,000 employees were let go. According a Reuters report, the upcoming layoffs could impact a similar number of employees, and an official announcement is expected alongside the company’s fourth-quarter results.
“The number of people affected could be similar to or slightly higher than the 4,000 employees Cisco laid off in February, and will likely be announced as early as Wednesday with the company's fourth-quarter results,” the report citing sources claimed.
As of July 2023, Cisco employed approximately 84,900 people, a figure that does not account for the February job cuts. The company, which is the leading manufacturer of routers and switches that direct internet traffic, has been facing sluggish demand and supply chain challenges in its core business. These pressures have driven Cisco to diversify its portfolio, including its $28 billion acquisition of cybersecurity firm Splunk in March, aimed at reducing reliance on one-time equipment sales by bolstering its subscription services.
Cisco has also been integrating AI into its offerings, with a target of $1 billion in AI product orders by 2025. In June, the company launched a $1 billion fund to invest in AI startups like Cohere, Mistral AI, and Scale AI, further solidifying its commitment to the AI space. This focus on AI and cybersecurity is part of a broader strategy to navigate the shifting technological landscape.
The announcement of the layoffs comes amid a broader trend in the tech industry, where companies are cutting costs to offset significant investments in AI. According to Layoffs.fyi, over 126,000 people have been laid off across 393 tech companies since the beginning of the year. Cisco’s decision to reduce its workforce aligns with these industry-wide cost-cutting measures.
Earlier this month, Intel also announced significant layoffs, cutting 15% of its workforce, or approximately 17,500 employees, as it struggles to turn around its manufacturing business. Cisco’s impending layoffs highlight the continued restructuring across the tech sector as companies adapt to new market realities.