Cisco to Cut Thousands of Jobs Amid Shift to Cybersecurity

Cisco, the U.S. networking equipment giant, is preparing for a second round of layoffs this year. The company is targeting thousands of employees as it pivots to focus on higher-growth sectors like cybersecurity and artificial intelligence (AI).

The impending job cuts could be similar in scale or even exceed the 4,000 positions eliminated in February 2023.

Cisco Layoff Details:

The job reductions, expected to be announced alongside the company’s fourth-quarter earnings, come as Cisco grapples with sluggish demand and supply-chain constraints in its core business of routers and switches.

Based in San Jose, California, the company employed approximately 84,900 people as of July 2023 before accounting for the earlier round of layoffs.

Cisco’s shares dropped nearly 1% following the report of the upcoming job cuts, adding to the stock’s over 9% decline this year.

Strategic Shift: Cybersecurity and AI:

Cisco has been strategically diversifying its business to reduce reliance on hardware sales. It is moving toward subscription-based services and expanding into cybersecurity and AI.

This shift included a $28 billion acquisition of cybersecurity firm Splunk, completed in March 2023. The acquisition aims to bolster Cisco’s subscription revenue and mitigate the impact of slowing hardware sales.

The company has also been integrating AI into its offerings, targeting $1 billion in AI product orders by 2025. In support of this goal, Cisco launched a $1 billion fund in June 2023 to invest in AI startups, such as Cohere, Mistral AI, and Scale AI. Over the past several years, Cisco has made 20 AI-focused acquisitions and investments.

Broader Industry Context:

Cisco’s layoffs are part of a broader trend in the tech industry, where companies are cutting costs to offset substantial investments in AI. According to Layoffs.fyi, more than 126,000 people have been laid off across 393 tech companies since the start of 2024.

Notably, chipmaker Intel recently cut over 15% of its workforce, or approximately 17,500 employees, as it seeks to revitalize its struggling manufacturing business.

Cisco’s continued focus on AI and cybersecurity underscores its steps to stay competitive in a rapidly evolving tech landscape, even as it navigates the challenges of its traditional business areas.