Cisco Systems Inc. is preparing to lay off thousands of employees in a second round of job cuts this year, according to a Reuters report. This new wave of layoffs follows a similar reduction in February, when the company cut approximately 4,000 positions.
The report, citing sources familiar with the matter, noted that the number of positions affected could mirror or exceed the previous reduction that happened in February. An official announcement is expected as early as Wednesday, August 14, coinciding with Cisco’s fourth-quarter earnings release. The company, based in San Jose, California, employed around 84,900 people as of July 2023. After February’s cuts, the workforce was reduced to approximately 80,000.
The move comes at the heels of Cisco grappling with sluggish demand and supply chain constraints in its core business of routers and switches. The company’s decision to reduce its workforce is part of a broader strategy to pivot towards higher-growth areas, including cybersecurity and artificial intelligence (AI).
The report promptly highlighted that the company’s focus on AI is evident in its recent acquisition of cybersecurity firm Splunk for $28 billion. The deal strengthens Cisco’s subscription-based services and reduces reliance on one-time equipment sales. Additionally, the company launched a $1 billion global investment fund dedicated to fostering secure and reliable AI solutions, and targeting startups such as Cohere, Mistral AI, and Scale AI. The company aims to secure $1 billion in AI product orders by 2025 and has made 20 AI-focused acquisitions and investments in recent years.
Cisco’s layoffs reflect a broader trend within the tech industry. Companies are making significant workforce reductions to manage the substantial investments required for AI development amid looming recession fears. Last week Dell announced similar measures, eliminating approximately 12,500 jobs as they restructure to become a “learner company” in the AI era. Similarly, Intel’s CEO earlier this month outlined cost-cutting initiatives with job reductions following their second-quarter earnings release, sending the company’s stock to a multi-year low.
