Cisco to Lay Off Thousands of Employees in Strategic Business Restructuring

Cisco Announces Major Business Restructuring

Technology giant Cisco is planning a major business restructuring that will involve laying off thousands of employees, according to inside sources. The company, based in San Jose, California, currently has a workforce of 84,900, as reported on its website. While the exact number of employees to be affected has not been finalized, an official announcement is expected in the coming week, coinciding with the company's earnings call scheduled for Feb. 14.

Previous Restructuring and Industry Trends

This decision follows a similar move in November 2022 when Cisco announced a restructuring that impacted approximately 5% of its workforce, resulting in $600 million in severance and other charges. Despite declining to comment on the recent reports, this strategic overhaul is believed to be an effort to streamline operations and shift focus toward high-growth areas within the industry.

The impending staff reduction is reflective of a broader trend within the tech sector, with companies like Amazon, Alphabet, and Microsoft also implementing layoffs. Additionally, telecom equipment makers Nokia and Ericsson underwent significant job cuts last year as part of cost-saving measures.

Challenges and Market Response

Cisco's decision comes amidst a backdrop of lowered revenue and profit forecasts in its previous earnings call, citing a slowdown in demand for its networking equipment. The company attributes this weakness to a decrease in customer orders, with a current emphasis on product installation and implementation in their respective environments.

The technology giant has faced challenges in its supply chain and experienced a post-pandemic slowdown in demand, prompting a strategic pivot towards software offerings, particularly in cybersecurity. This move indicates Cisco's proactive response to market dynamics, aiming to adapt to changing industry conditions and emerging opportunities for growth.