In Short:
Cisco plans to cut 7% of its global workforce as part of a restructuring to invest in growth areas like artificial intelligence, cloud, and cybersecurity. This follows a previous 5% cut impacting 4,000 jobs. Cisco aims to boost efficiency and diversify through the recent purchase of cybersecurity firm Splunk and a new $1 billion fund for AI startups. Key leadership changes are also in motion.
Cisco has announced plans to reduce its global workforce by 7% as part of a strategic realignment aimed at enhancing its investments in high-growth sectors, including artificial intelligence (AI), cloud, and cybersecurity.
Restructuring for Growth
In a statement during the company’s Q4 2024 earnings call, Charles H. Robbins, Chairman and Chief Executive Officer of Cisco, emphasized, “We remain laser-focused on growth and consistent execution as we invest to win in AI, cloud, and cybersecurity. To focus on these key priority areas, we announced a restructuring plan to allow us to invest in key growth opportunities and drive more efficiency in our business.”
The restructuring initiative is expected to result in pre-tax charges of up to $1 billion. Earlier in the year, in February, Cisco had previously stated it would eliminate 5% of its workforce, impacting approximately 4,000 jobs.
Investment in Key Areas
The San Jose, California-based company, renowned for its routers and switches, is facing challenges with subdued demand in its core networking business. To diversify its offerings, Cisco recently concluded a significant $28 billion acquisition of the cybersecurity firm Splunk, which is anticipated to enhance its subscription services and lessen dependency on one-time equipment sales.
Additionally, in June, Cisco introduced a $1 billion fund aimed at investing in AI startups such as Cohere, Mistral AI, and Scale AI.
Organizational Changes
Richard Scott Herren, Executive Vice President and Chief Financial Officer, conveyed, “Networking continues to be incredibly important to us, and we’ll continue to support that space as well. But it’s looking for efficiencies as we look across the company really in every way so that we can take those resources and allocate them into the fastest-growing spaces.”
As part of this restructuring, Cisco will consolidate its networking, security, and collaboration teams into a single organization under Jeetu Patel, who will assume an expanded role as the Executive Vice President and Chief Product Officer. Furthermore, Jonathan Davidson will transition from his leadership role in Cisco Networking to an advisory position.
Robbins added in a separate blog post, “As we complete the full integration of Splunk into Cisco, the Splunk product line will also integrate into this new organization at the right time, bringing our entire product portfolio together as one team.”
