Cisco to Implement Second Round of Layoffs in 2024 as It Shifts Focus to Cybersecurity and AI

358

Cisco Systems Inc. (CSCO.O) is set to announce a second wave of job cuts this year as the company continues to pivot towards higher-growth sectors, including cybersecurity and artificial intelligence (AI). According to sources familiar with the matter, the upcoming layoffs could mirror or exceed the 4,000 positions eliminated in February. The details are expected to be revealed alongside Cisco’s fourth-quarter financial results, which are anticipated as early as Wednesday.

The news of these additional layoffs comes after Cisco, headquartered in San Jose, California, initially disclosed job cuts earlier in the year. At that time, Reuters reported the reduction of 4,000 employees, a move aimed at restructuring the company amidst challenging market conditions.

As of July 2023, Cisco employed approximately 84,900 individuals, not accounting for the February layoffs. The company’s shares experienced a nearly 1% decline following the latest reports, contributing to a broader 9% decrease in stock value for the year as of Thursday’s close.

Cisco, a leading provider of networking equipment essential for internet infrastructure, has been facing challenges such as sluggish demand and supply-chain issues. In response, the company is shifting its focus towards more profitable areas, including cybersecurity and AI. This strategic pivot includes the $28 billion acquisition of cybersecurity firm Splunk, completed in March, which aims to reduce Cisco’s dependency on one-time equipment sales by expanding its subscription-based services.

The company has also been active in integrating AI into its product offerings. In May, Cisco reiterated its goal to secure $1 billion in AI product orders by 2025. Additionally, in June, Cisco launched a $1 billion fund to invest in AI startups like Cohere, Mistral AI, and Scale AI. This investment initiative is part of a broader effort that has seen Cisco make 20 AI-focused acquisitions and investments in recent years.

The layoffs are part of a wider trend in the tech industry, where companies have been scaling back their workforce to manage the costs associated with significant investments in AI technology. According to data from Layoffs.fyi, over 126,000 employees have been laid off across 393 tech companies since the beginning of the year.

Earlier this month, chipmaker Intel (INTC.O) also announced a substantial workforce reduction, cutting more than 15% of its employees, or approximately 17,500 people, in an effort to revitalize its struggling manufacturing business.