Network giant Cisco is reportedly gearing up for a significant business restructuring, including the possibility of laying off thousands of employees, as it aims to concentrate on high-growth sectors, according to three insider sources.
Employee Count and Restructuring Scope:
With a workforce of 84,900 as of fiscal 2023, Cisco is deliberating the extent of the impending layoffs, with an official announcement expected as early as next week, coinciding with its upcoming earnings call on February 14th.
This potential restructuring follows a similar move in November 2022 when Cisco announced workforce reductions affecting approximately 5% of its employees, resulting in $600 million in associated severance and charges.
Industry Trend and Cost Reductions:
Amidst a broader trend in the tech sector, marked by layoffs at telecom giants Nokia and Ericsson, several major tech companies like Amazon, Alphabet, and Microsoft have also recently implemented workforce reductions, signaling a concerted effort to lower operational costs.
Market Challenges and Revenue Forecast Adjustments:
Cisco’s decision to restructure comes in response to challenges in its core business, including a slowdown in demand for networking equipment, as evidenced by its downward revision of full-year revenue and profit forecasts in the previous earnings call.
The company cited a shift in customer focus toward product installation and implementation, signaling ongoing challenges in adapting to evolving market dynamics post-pandemic.
Strategic Shifts and Software Emphasis:
Facing supply chain disruptions and a demand slowdown, Cisco has accelerated its pivot towards software offerings such as cybersecurity, aiming to capitalize on emerging market opportunities and mitigate the impact of hardware-related challenges.