Cisco Plans Second Round of Layoffs, Targets Thousands as Focus Shifts to Cybersecurity and AI

Cisco is preparing for a second significant round of layoffs this year, expected to affect thousands of employees as the tech giant redirects its focus toward high-growth areas such as cybersecurity and artificial intelligence (AI). This follows a similar round of job cuts in February, when the company let go of 4,000 employees.

According to a Reuters report, the forthcoming layoffs could impact a comparable number of workers, with an official announcement likely to coincide with the company's fourth-quarter results. Sources indicate that the number of employees affected could be similar to or even exceed the February layoffs.

As of July 2023, Cisco employed approximately 84,900 people, a figure that does not include the February job cuts. The company, a leader in manufacturing routers and switches that manage internet traffic, has been grappling with declining demand and supply chain issues in its core business. In response, Cisco has been diversifying its portfolio, including its $28 billion acquisition of cybersecurity firm Splunk in March. This acquisition is part of a broader strategy to reduce reliance on hardware sales by expanding its subscription-based services.

Additionally, Cisco has been integrating AI into its product offerings, with a goal of reaching $1 billion in AI product orders by 2025. In June, the company launched a $1 billion fund to invest in AI startups such as Cohere, Mistral AI, and Scale AI, reinforcing its commitment to the AI sector. This shift towards AI and cybersecurity is central to Cisco’s strategy for navigating the evolving technological landscape.

The impending layoffs at Cisco come amidst a broader trend in the tech industry, where companies are cutting costs to counterbalance substantial investments in AI. According to Layoffs.fyi, more than 126,000 employees have been laid off across 393 tech companies since the start of the year. Cisco’s decision to trim its workforce is in line with these industry-wide cost-cutting efforts.
Earlier this month, Intel also announced significant layoffs, reducing its workforce by 15%, or about 17,500 employees, as it faces challenges in revitalizing its manufacturing business. Cisco’s upcoming layoffs underscore the ongoing restructuring in the tech sector as companies adapt to new market dynamics.