Cisco to lay off more than 4,000 as it shifts focus to AI and Cybersecurity
Reuters reports that Cisco Systems will cut thousands of jobs in its second round of layoffs this year. The number of people affected could be similar to or slightly higher than the 4,000 employees Cisco laid off in February, and will likely be announced as early as Wednesday with the company’s fourth-quarter results.
The San Jose, CA headquartered networking company plans to shift its product focus to higher-growth areas, such as AI and cybersecurity. It’s current set of products and services are listed here.
Cisco has been contending with weakening demand and persistent supply chain issues in its core business – routers and switches – that are used by ISPs and enterprise private networks. Two reasons for that are: 1.] the major cloud service providers design their own switch/routers or use bare metal switches (made by ODMs in Taiwan and China), and 2.] enterprise private/virtual private networks are being replaced by cloud network solutions.
- Global enterprise network sales have been declining. Dell’Oro Group reported sales contractions in Branch Routing and Campus Switching in 4Q-2023 and that is expected to continue throughout most of 2024. On premises data centers (which use Cisco Ethernet switches) are not growing. In its place……
- Enterprise spending on cloud infrastructure services is growing by leaps and bounds. It’s now nearing $80 billion per quarter. Cloud customers increased their spending on cloud services by $14.1 billion to $79.1 billion in the 2Q-2024, an increase of 22% year-over-year. It’s the third consecutive quarter in which the year-over-year growth rate was 20% or more, with generative AI being one of the factors behind the market acceleration.
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As a result of stagnant sales of its core networking products, Cisco has been pursuing a strategy aimed at diversifying its revenue streams. One of the most significant moves in this direction was the $28 billion acquisition of Splunk, a cybersecurity firm, which was finalized in March. This purchase is expected to boost Cisco’s subscription-based services, reducing its dependence on one-time hardware sales, which have been increasingly susceptible to market volatility.
Cisco’s major shift towards AI is a key part of its long-term strategy. In May, the company reiterated its ambitious goal of achieving $1 billion in AI-related product orders by 2025. This target is supported by a $1 billion fund launched in June, aimed at investing in AI startups such as Cohere, Mistral AI, and Scale AI. Over the past few years, Cisco has made over 20 AI-focused acquisitions and investments, highlighting its commitment to integrating AI into its product offerings.
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Over 126,000 employees have been laid off across 393 tech companies since the start of the year, according to data from tracking website Layoffs.fyi. That surely reflects their need to cut costs to balance huge investments in AI, analytics and related technologies.
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References:
https://www.cisco.com/c/en/us/products/index.html#~products-by-technology
Cisco to Implement Second Round of Layoffs Amidst Strategic Shift to AI and Cybersecurity
Worldwide Enterprise Network Spending Follows Roller Coaster Trajectory
Cisco restructuring plan will result in ~4100 layoffs; focus on security and cloud based products
The question is whether the company will end up being well-positioned to maintain its growth trajectory with this lower headcount or if the company will end up hiring back many of the employees it laid off. Time will tell. However, given Cisco’s current employee count of around 85,000, this cut will amount to less than 5% of its overall workforce. That’s still significant, but maybe not as big a deal as many may initially think.
https://www.msn.com/en-us/money/markets/cisco-layoffs-2024-what-to-know-about-the-latest-job-cuts-at-csco/ar-AA1oJYSs?ocid=finance-verthp-feeds
New waves of Cisco layoffs surface as tech job cuts worsen in Bay Area
Fresh waves of job cuts have surfaced at Cisco Systems, which will slash dozens more workers in San Jose as tech companies eliminate hundreds of positions in the latest round of staffing reductions.
Cisco Systems has decided to chop another 53 jobs in the South Bay, according to an official WARN notice the legendary tech titan sent to the state Employment Development Department.
https://www.siliconvalley.com/2024/08/26/san-jose-cisco-tech-economy-jobs-layoffs-intel-amazon-google-facebook/amp/