Cisco Systems Inc. is set to announce a second wave of layoffs this year as part of its strategic shift towards high-growth areas such as cybersecurity and artificial intelligence (AI). The company is expected to disclose details of the job cuts as early as Wednesday, alongside its fourth-quarter financial results. The latest round of layoffs could match or exceed the 4,000 employees let go in February, according to sources familiar with the matter.
As of July 2023, Cisco employed approximately 84,900 people, a figure that does not reflect the impact of the February job reductions. The San Jose, California-based networking equipment giant has yet to comment on the new round of layoffs.
Cisco has faced challenges with sluggish demand and supply-chain issues affecting its core business of routers and switches. In response, the company is accelerating its transformation by focusing on expanding its cybersecurity and AI capabilities. This strategic pivot includes its recent $28 billion acquisition of cybersecurity firm Splunk, completed in March, aimed at bolstering its subscription-based revenue model.
Additionally, Cisco has been ramping up its AI efforts, targeting $1 billion in AI product orders by 2025. The company launched a $1 billion fund in June to invest in AI startups like Cohere, Mistral AI, and Scale AI, and has made 20 AI-focused acquisitions and investments in recent years.
The layoffs come amidst a broader trend in the tech industry, where companies are adjusting their workforce to balance substantial investments in AI with the need to control costs. According to Layoffs.fyi, over 126,000 tech workers have been laid off across 393 companies since the beginning of the year. Intel, for instance, recently reduced its workforce by more than 15%, or approximately 17,500 employees, in an effort to address challenges in its manufacturing sector.
Cisco's move reflects its broader strategy to realign resources towards emerging growth areas while navigating ongoing market pressures.
