Cisco will cut thousands of employees in a second round of layoffs. According to Reuters, this is due to the fact that the company intends to shift its focus to areas with high growth rates, including cybersecurity and artificial intelligence (AI) systems.
If in February Cisco fired about 4 thousand people, now, it is possible that several more will be laid off. Most likely, the company will announce difficult personnel decisions next Wednesday during its next quarterly report. At one time, Reuters reported about the February layoffs even before the company itself announced it, so its sources can be considered quite reliable. At the same time, in July 2023, Cisco’s staff was 84.9 thousand people.
Image Source: Hunters Race/unsplash.com
After Reuters reported about the next cuts, the company’s shares fell in price by about 1%, in total they fell in price by more than 9% over the year. The company is now suffering from low demand and supply chain issues for its core business. This forces it to diversify its business – for example, in March the deal to purchase cybersecurity company Splunk for $28 billion was closed. The acquisition will reduce dependence on “one-time” sales, stimulating business related to the sale of technology solutions via subscriptions.
The company is also trying to integrate AI into its products and in May confirmed its intention to achieve $1 billion in sales of AI solutions in 2025. In June, the company launched a billion-dollar fund to invest in AI startups like Cohere, Mistral AI and Scale AI. At the time, the company announced that it had acquired 20 AI-related companies in recent years.
The layoffs are the latest of their kind in the tech industry, as it cuts costs this year to offset big investments in AI. In total, according to the Layoffs.fyi portal, since the beginning of the year, more than 126 thousand people have been laid off in 393 technology companies. Earlier in August, Dell announced it would cut more than 10% of its workforce—about 12,500 people, mostly from sales and marketing departments.