In Short:
Cisco is planning to cut thousands of jobs for the second time this year to focus on cybersecurity and AI. The layoffs could be similar to the 4,000 in February. The company aims to diversify its business and boost its subscription model. Cisco is also investing in AI startups and aiming for $1 billion in AI product orders by 2025. This move follows a trend in the tech industry of cutting costs to invest in AI.
Cisco to Cut Thousands of Jobs in Second Round of Layoffs
By Utkarsh Shetti and Supantha Mukherjee
Cisco is set to reduce its workforce in a second round of layoffs this year as it shifts its focus to higher-growth areas such as cybersecurity and AI, according to sources familiar with the matter.
Details of the Layoffs
The number of employees affected could be similar to or slightly higher than the 4,000 job cuts Cisco made back in February. The official announcement is expected to be made along with the company’s fourth-quarter results, possibly on Wednesday. The company had a workforce of around 84,900 as of July 2023.
Cisco has not yet responded to requests for comments regarding the upcoming layoffs. Following reports of the cuts, the company’s shares experienced a nearly 1% decline, with the stock down more than 9% so far this year.
Business Strategy and Industry Trends
As the largest manufacturer of routers and switches, Cisco has been facing challenges like sluggish demand and supply-chain issues. To counter these challenges, the company has been diversifying its portfolio, including the recent $28 billion acquisition of Splunk, a cybersecurity firm.
In an effort to incorporate more AI products into its offerings, Cisco aims to reach $1 billion in AI product orders by 2025. The company has also launched a $1 billion fund to invest in AI startups.
Tech Industry Layoffs
The tech industry has been witnessing a wave of layoffs this year, with over 126,000 job cuts across 393 tech companies since the beginning of the year. For instance, chipmaker Intel recently reduced its workforce by over 15% (around 17,500 employees) to revamp its money-losing manufacturing business.
