Hot on the heels of a major layoff in February and a $28 billion acquisition in March, tech giant Cisco Systems has announced the second round of layoffs as part of a company-wide restructuring plan.
Second Round for Cisco
Cisco Systems has announced its second round of layoffs this year according to a filing made with the Securities and Exchange Commission on Wednesday.
Company Restructure
The San Jose-based telecommunications company announced plans to restructure the company, which would include reducing its global workforce by 7% in total.
Two Layoffs in Six Months
The announcement comes mere months after the company made a similar announcement in February, where it cut more than 4,000 jobs in a bid to reduce its workforce by just 5%.
7% Workforce Reduction
As of July 2023, Cisco has a global workforce of approximately 84,900. While it did not name a specific number of jobs that would be laid off in this second round, a 7% workforce reduction will likely bring total layoffs this year to an estimated 5,900.
Efficiency and Growth Opportunities
Cisco spokesperson Robyn Blum gave the San Francisco news website SF Gate some further insight into the most recent layoffs, which would enable the company to invest further into “key growth opportunities and drive more efficiency in our business.”
Driving Future Growth
“We are focused on executing our strategy and investing in the areas that will drive our future growth,” said CEO Chuck Robbins in a statement on this year’s layoffs.
A Difficult But Necessary Decision
“While the decisions we’ve made are difficult, they are necessary to position Cisco for success in the years ahead,” he added.
Full Support for Workers
While no specific information around severance pay and other benefits for affected workers was given, Blum said the company intends to give them “full support” following their termination.
Shifting Focus to AI
The second round of Cisco layoffs this year comes as the company shifts its focus to more specific high-growth areas, such as artificial intelligence technology and cybersecurity.
“Laser-Focused” on Growth and New Investment
“As we look to build on our performance, we remain laser-focused on growth and consistent execution as we invest to win in AI, cloud and cybersecurity, while maintaining capital returns,” said CFO Scott Herren in a recent statement.
Reiterated Across the Company
Blum reiterated this by telling SF Gate that the company is now prioritizing “growth, consistent execution, and resetting our cost structure as we invest in AI, cloud, and cybersecurity.”
Redirecting Costs
By reducing workforce costs, the company will be able to redirect more cash into new ventures. In the case of Cisco, it will allow them to invest more heavily in the fastest-growing tech industries like AI and cloud computing services.
Major Emerging Technologies
These two industries and other emerging technologies have become a major priority for the world’s biggest tech companies including Google, Apple, and Amazon.
An Important Move
Innovation into more profitable technologies will be essential for Cisco, which saw its profits for the 2024 fiscal year decrease by 18% compared to profits in 2023. Its revenue also dropped by 6%, the first decline in revenue since 2020.
Less Hardware, More Innovation
The company is seeking to reduce its reliance on networking equipment and other hardware, which have been hit by falling demand and supply-chain issues since the COVID-19 pandemic.
Splunk Acquisition
Cisco’s shift to focus on AI and cybersecurity has been in full effect this year, particularly as it finalized its $28 billion acquisition of cybersecurity firm Splunk in March.
Important for Cybersecurity and Data Analytics
While the buyout had a negative impact on the company’s earnings per share in the fourth quarter of the 2024 fiscal year, it is expected to be a major contributor to Cisco’s long-term expansion into data analytics and cybersecurity.
$1 Billion Investment in AI
Back in June Cisco also announced plans to invest $1 billion into AI startups like Cohere, Mistral, and Scale which will help it to develop new AI products.
Nvidia Partnerships
The company also announced a new partnership with Nvidia in February which aims to develop new infrastructure solutions for AI systems.
Better AI Infrastructure
“Working closely with Cisco, we’re making it easier than ever for enterprises to obtain the infrastructure they need to benefit from AI, the most powerful technology force of our lifetime,” said Nvidia CEO Jensen Huang in a press release on the partnership.
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