Cisco to lay off thousands more in second job cut this year

Cisco Systems Inc., the U.S. networking giant, is set to lay off thousands of employees in a second round of job cuts this year as it pivots towards higher-growth sectors like cybersecurity and artificial intelligence.

According to sources familiar with the matter, the latest layoffs could affect a similar number of employees as the 4,000 job cuts announced in February, with the official announcement expected to coincide with the company’s fourth-quarter earnings release.

This new wave of layoffs reflects Cisco’s ongoing efforts to adapt to changing market conditions. The company, which employed approximately 84,900 people as of July 2023, has faced challenges such as sluggish demand and supply chain issues in its core networking equipment business. As a result, Cisco is diversifying its portfolio, moving away from its traditional reliance on hardware sales.

In March, Cisco completed a $28 billion acquisition of cybersecurity firm Splunk, a strategic move aimed at bolstering its subscription-based services and reducing dependence on one-time equipment sales. The company has also been focusing on AI, with a goal of reaching $1 billion in AI product orders by 2025. In June, Cisco launched a $1 billion fund to invest in AI startups, including Cohere, Mistral AI, and Scale AI, and has made 20 AI-focused acquisitions and investments in recent years.

The layoffs come amid a broader cost-cutting trend across the tech industry, as companies grapple with the financial pressures of investing in AI and other emerging technologies. According to Layoffs.fyi, more than 126,000 employees have been laid off across 393 tech companies so far this year. Just recently, Intel announced plans to cut 15% of its workforce, or approximately 15,000 employees in a major restructuring plan.