Why Cisco Is Laying Off 5% of Its Workforce; ‘This Is Not About Cost Savings'
In recent times, everyone is aware of the mass layoff decisions made by big companies across the globe. When the companies fire employees by stating cost cutting as the reason, it could probably be a mass layoff. This decision of the company affects employees as some have loans to pay while others are the sole earners of their families. Also, it has become a bit difficult to find a stable job after the pandemic. The year 2023 witnessed close to 0.25 million layoffs and 2024 is not bringing any relief. Recently, Meta, Twitter, Google, and Amazon laid off thousands of employees. And now Cisco has added itself to the list with the announcement of laying off 5% of its workforce, per CNBC. Let's delve more into the details.
Latest layoff announcement by Cisco
Cisco or the Computer Information System Company was founded in 1922 with its headquarters in San Jose, California. Earning a revenue of more than $51 billion with the help of 84,900 employees, Cisco is focused on delivering innovative software solutions to its customers worldwide. Recently, the company announced its 5% employee layoffs which means that around 4,000 workers will be losing their jobs. The company stated that organization realignment with making crucial investments in other areas was the main reason behind layoffs.
Amongst Cisco's total employees, almost half of the staff hails from the United States with 30% devoting their time to marketing sales and 28% to R&D (Research and Development). After Cisco took this massive step, Robyn Blum, the company's spokesperson further mentioned that for them, people's satisfaction is the most important. They revealed that they will be spending $800 million on severance payments and other discontinuation benefits to aid them make the career transition. Blum then told SFGATE the primary reason is the uncertain economic challenges and the changing market for the service providers.
Recently Cisco announced its partnership expansion with Nvidia, focusing on AI integration and management. Nvidia's Ethernet networking solution-based products will now be sold through Cisco's humungous global platform. Cisco and Nvidia announced that they have joined hands to help not just the big giants but also middle-sized companies to leverage the AI computing setups into their systems, They further aimed at making the technology and the products simple for everyone to understand and benefit from them. Post the disclosure and the merger, Cisco shares demonstrated a jump of 0.7%.
Layoffs are not new at Cisco
This is not the first time that the company has announced layoffs— it took some harsh steps in 2022 and 2023 as well. The company announced laying off 350 of its employees in 2023. The offices in San Jose lost 227 employees while 123 from nearby Milpitas, California. Going back in 2022, Cisco disclosed its decision to lay off 5% of its workforce, the same way it did in 2024. The management started by laying off 700 employees from Silicon Valley and said that employees involved in other business units would be the ones affected in the next round.
The company stated restructuring as their main reason and revealed that these layoffs were a crucial part of their $600 million plan. Cisco then issued a statement, saying, "These recent notifications are part of the rebalancing effort we began in November 2022, which included a limited restructuring impacting our real estate portfolio and approximately 5% of our workforce. As we announced then, this is not about cost savings as we have roughly the same number of employees as we did before the process began." The statement further said that the rebalancing is about prioritizing investments and about meeting and exceeding their customers' expectations in the changing technology landscape.