Technology company Cisco has announced plans to slash thousands of jobs as part of its strategic shift towards AI and cybersecurity.
The move comes as the tech giant refocuses its efforts on emerging technologies, aligning its workforce with its new priorities. The proposed second round of layoff is coming after the company in February this year, laid off 5% of its global workforce.
According to Reuters, the second round of layoffs, is expected to be similar in scope, or potentially slightly larger than the last round six months ago, that saw about 4,000 jobs cut. The official announcement could be disclosed on Wednesday when Cisco is due to share its fourth-quarter results.
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The networking hardware and software maker is taking the difficult decision as it prepares for another challenging quarter. Cisco previously forecasted Q4 revenues of $13.4-$13.6 billion, down about 11 percent year-over-year. In addition to declining revenues, the firm has also grappled with falling profits. In Q3, it saw its net income plunge 41 percent YoY from $3.2 billion to $1.9 billion.
Cisco is heading into earnings week following several months of slow demand for its network equipment, as well as reduced demand and revenue decline that the company experienced which may be the driving factor behind its decision to cut thousands of jobs. In February, Cisco Chief Executive Officer Chuck Robbins attributed the decreased in demand to two main factors. He noted that there was a “greater degree of caution and scrutiny of deals” because of macroeconomic uncertainty.
Additionally, he disclosed that many customers still had unused network equipment left over from previous purchases. Cisco disclosed at the time that some customers had more than 20 weeks’ worth of excess inventory. Despite the layoffs, the company remains committed to investing in areas that are critical for its future growth, particularly in AI-driven solutions and enhanced cybersecurity measures. This restructuring underscores the company’s intent to stay competitive in a rapidly evolving tech landscape.
Notably, Cisco has also been working to establish itself as an Al networking vendor. At Cisco Live EU in February, the company announced a series of hardware and software platforms developed in collaboration with Nvidia designed to peddle its Ethernet kit to enterprises deploying GPU clusters or Al inference and training.
As the world continues to grapple with macroeconomic challenges, the tech industry, which was shaken by mass layoffs at the start of 2023, has continued to experience rounds of smaller layoffs as part of restructuring efforts throughout 2024. So far, more than 130,000 IT professionals have reportedly lost their jobs this year. The trend of job cuts however shows no signs of slowing down, as the industry continues to face economic challenges, competitive pressures, and the need to adapt to new market realities.
According to data from Layoffs.fyi, a staggering 130,482 employees across 397 companies have been laid off so far this year. As Cisco is reportedly preparing for another round of significant job cuts, several other tech companies have downsized their workforce.
Earlier in July, Intel announced plans to reduce its workforce significantly. The chipmaker is reportedly planning to lay off more than 15,000 employees, representing over 15 percent of its total workforce. Also, last month, tech giant Microsoft reduced its workforce by around 1,000 employees over primarily in its mixed reality and Azure ‘moonshots’ divisions.