Cisco is set to implement a significant round of layoffs, marking the second wave of job cuts this year as the U.S.-based networking giant shifts its focus toward higher-growth sectors like cybersecurity and AI. According to sources familiar with the situation, the upcoming layoffs may affect a number of employees comparable to or slightly higher than the 4,000 let go in February. The announcement is expected to coincide with the release of the company’s fourth-quarter financial results, possibly as early as Wednesday.
Cisco, headquartered in San Jose, California, had about 84,900 employees as of July 2023, a figure that does not account for the previous layoffs. The company has yet to comment on the anticipated job cuts. Following news of the layoffs, Cisco’s shares dipped nearly 1%, contributing to an overall 9% decline in its stock value this year.
As the largest producer of routers and switches that facilitate internet traffic, Cisco has faced challenges with waning demand and supply-chain issues in its core business. In response, the company has been diversifying its portfolio, including the $28 billion acquisition of cybersecurity firm Splunk, which was completed in March. This strategic move aims to decrease Cisco’s dependence on one-time hardware sales by bolstering its subscription-based services.
Cisco is also integrating AI into its product lineup, with a target of reaching $1 billion in AI-related orders by 2025. In June, the company launched a $1 billion fund to invest in AI startups such as Cohere, Mistral AI, and Scale AI. Over the past several years, Cisco has made 20 AI-focused acquisitions and investments.
The layoffs are part of a broader trend in the tech industry, where companies have been reducing costs to balance the substantial investments made in AI. Since the start of the year, more than 126,000 employees across 393 tech firms have been laid off, according to data from Layoffs.fyi. Earlier in August, chipmaker Intel also announced significant cuts, reducing its workforce by over 15%, or about 17,500 employees, in an effort to stabilize its struggling manufacturing division.
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