Cisco is preparing for another round of significant job cuts. According to a report from Reuters, the tech giant is reportedly planning to eliminate thousands of positions, marking the company’s second major layoff this year. This decision comes as the company grapples with declining demand and shifts its focus toward emerging areas like artificial intelligence (AI).
Earlier this year, Cisco cut 4,000 people, affecting approximately 5% of its employees. Reuters reported that Cisco may announce the layoffs as early as next week. The company is set to release its fourth-quarter financial results on August 14.
Cisco’s shifting focus: AI investments and cost-cutting
The upcoming layoffs at Cisco are expected to be substantial, potentially matching or surpassing the 4,000 job cuts implemented in February. The company’s workforce totaled approximately 85,000 employees at the end of its last fiscal year, a figure that does not account for the earlier reductions.
Cisco’s acquisition of cybersecurity firm Splunk for $28 billion in March reflects a strategic shift towards subscription-based services. However, the company is also facing pressure to reduce costs as it invests heavily in AI. Cisco has allocated $1 billion to fund AI startups and has made numerous acquisitions in the space. Balancing these investments with cost-cutting measures has become a significant challenge amid uncertainty about AI’s return on investment.
The industry has seen a wave of job cuts in 2024, with over 126,000 employees laid off across 393 companies, according to Layoffs.fyi. Chipmaker Intel recently led the pack, announcing cuts impacting roughly 17,500 workers (15% of their workforce) in an effort to improve their struggling manufacturing operations.
A wave of tech industry layoffs
They’re not the only ones. It’s been a tough year for many big companies, with layoffs becoming a common headline.
Dell
Dell recently announced significant job cuts within its sales team as part of a broader strategy to reduce its global workforce to under 100,000 employees. While the exact number of layoffs is undisclosed, the company aims to become “leaner” through these reductions.
LegalZoom
Online legal services provider LegalZoom is reducing its global workforce by 15% and pausing new hires to cut costs by $25 million.
Eventbrite
Eventbrite announced its second round of layoffs this year, cutting an additional 8% of its staff. The company has reduced its workforce by nearly 20% overall in 2024.
OpenText
Ontario, Canada-based OpenText laid off about 1,200 employees, which is around 1.7% of its workforce, as part of a new business optimization plan.
Analyzing why these huge firms are letting people go might offer a glimpse into broader trends in the economy. As businesses begin to wrap up 2024 and prepare for next year, understanding their decisions could be a big help for anyone trying to figure out what’s next for their business.
“Cisco’s layoffs could be indicative of broader industry trends where companies are reevaluating their workforce and operations,” Seth Kilander, founder and CEO of Ki Security and Compliance Group, told Channel Insider. “It’s important for MSPs to watch these developments closely to understand potential impacts on the market and adjust strategies accordingly.”
Kilander goes on to say that these layoffs may also reflect a shift in focus towards newer technologies. He urges MSPs to stay ahead of these shifts, making sure that they are prepared to support clients with emerging tech solutions that Cisco might prioritize going forward.
“The layoffs at Cisco remind us of the importance of resilience,” Kilander adds. “As MSPs, we must remain prepared for industry changes, ensuring our businesses and our clients can weather any storms that come our way.”
Read about another round of recent layoffs that occurred as part of a business optimization plan, highlighting the numerous reasons companies are saying goodbye to large swaths of employees.