Cisco will shed 7 per cent of its workforce as the US tech multinational pivots towards AI and cybersecurity.
It’s the third round of major job cuts at Cisco in the last two years, and came after fourth quarter financial results revealed a drop in revenue of 10 per cent, from $22.8 billion ($US15.2 billion) last year to $20.4 billion ($US13.64 billion).
Cisco did not specify the number of jobs that would be cut, but said it would be reducing its workforce by 7 per cent.
Based on its most recent publicly stated headcount of 84,900, about 6,000 workers will be losing their jobs.
The company said the job cuts would cost about $1.5 billion ($US1 billion) in severance and other one-time payments.
The cuts will allow Cisco to “invest in key growth opportunities and drive more efficiencies”, and are more about “reallocating versus being in pursuit of cost savings”, the company’s CFO Scott Herren said.
“As we look to build on our performance, we remain laser-focused on growth and consistent execution as we invest to win in AU, cloud and cyber security, while maintaining capital returns,” Herren said in the financial statement.
“It’s much more about finding efficiencies across the company so that we can pivot more resources…into the fastest growth areas within the company, which are pivoting more into AI, piloting more into cloud and pivoting more into cyber security.”
A pivot to AI
The news comes just six months after Cisco cut 4,000 jobs in February. The company also shed about 5,000 workers in late 2022, resulting in about 15,000 jobs shed at the firm in the last two years.
It also comes just weeks after fellow tech giant Intel announced it would be reducing its own workforce by 15 per cent, or 15,000 jobs, after taking a $2.5 billion loss in its financial results.
Based in San Jose, California, Cisco has manufactured tech hardware and developed software in the networking space over the last 40 years.
It has recently made efforts to pivot away from hardware and position itself as a leader in the networking services and software space, with a focus on AI and cyber security.
This was led by a massive acquisition of software firm Splunk last year for $43.6 billion.
Cisco also recently announced a partnership with chip developer Nvidia to develop infrastructure for AI systems, and launched a cyber security readiness index earlier this year to assist businesses in determining their preparedness for attacks.
In June, Cisco also announced it would be investing $1.5 billion ($US1 billion) in tech startups with a focus on AI products, including Cohere, Mistral and Scale.
The company’s financial results and announced job cuts saw its shares increase by 6 per cent the next day.
“We delivered a strong close to fiscal 2024,” Cisco CEO Chuck Robbins said.
“In our fourth quarter we saw steady customer demand with order growth across the business as customers rely on Cisco to connect and protect all aspects of their organisations in the era of AI.”
There have been a number of significant job cuts at some of the biggest tech firms in the world this year.
The likes of Tesla, PayPal, Dell, Spotify, Salesforce and Microsoft have all made major reductions to their workforces.
According to layoffs.fyi, there have been more than 130,000 tech workers laid off across more than 400 companies this year.
