Cisco Systems is set to announce a significant round of layoffs, marking the second such move this year, as the networking giant pivots towards higher-growth areas such as artificial intelligence and cybersecurity as reported by Reuters. Sources close to the matter, who have opted to remain anonymous, indicate that the number of job cuts could match or exceed the 4,000 employees let go in February. The announcement is expected as early as Wednesday, coinciding with the release of Cisco's fourth-quarter financial results.
This latest wave of redundancies reflects Cisco's ongoing struggle with diminishing demand and supply-chain challenges in its core business of routers and switches. To counter these issues, the San Jose-based company has been actively diversifying its portfolio. Notably, Cisco completed a $28 billion acquisition of cybersecurity firm Splunk in March, a move aimed at bolstering its subscription services and reducing its dependence on one-time equipment sales.
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As part of its strategic overhaul, Cisco is also increasing its focus on artificial intelligence. The company has set an ambitious target of securing $1 billion in AI product orders by 2025 and, in June, launched a $1 billion fund to invest in AI startups, including Cohere, Mistral AI, and Scale AI. To date, Cisco has made 20 AI-focused acquisitions and investments, underscoring its commitment to becoming a major player in the burgeoning AI sector.
The layoffs at Cisco are part of a broader trend in the technology industry, where companies are cutting costs to balance hefty investments in artificial intelligence. According to data from Layoffs.fyi, more than 126,000 tech workers have been made redundant across 393 companies since the start of the year. Earlier this month, chipmaker Intel announced a 15% reduction in its workforce, amounting to approximately 17,500 jobs, as it struggles to revitalise its loss-making manufacturing division.
Cisco, which employed approximately 84,900 people as of July 2023, did not immediately respond to requests for comment on the impending layoffs.
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