Cisco Systems lays off 4,000 workers in latest wave of cuts to hit tech industry
Cisco Systems, an internet networking pioneer, is set to lay off more than 4,000 employees.
This move joins a growing trend among tech companies that has seen profits and stock prices rise, but also highlights the job insecurity in an industry increasingly turning to artificial intelligence. The mass layoffs, announced alongside Cisco's latest quarterly results, represent about 5% of its global workforce of 84,900.
This follows Cisco's late 2022 cutbacks that saw 5,000 workers let go, and comes before its $28 billion (£22 billion) acquisition of Splunk, which management now expects to complete by April 30. The company, best known for creating much of the technology that connects the internet, anticipates the reorganisation will cost an additional $800 million (£637.5 million).
This double hit of two large-scale layoffs in two years is a phenomenon affecting other big tech companies, such as Google and Amazon, both of which have trimmed their once steadily growing payrolls multiple times since the end of 2022.
Despite still making big profits, many companies are cutting costs. CEO Chuck Robbins said on Wednesday that Cisco expects demand for its products and software services to slow down over the next three to six months. This is because customers are being more cautious due to the uncertain economic outlook.
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This follows a series of major job cuts at Microsoft, TikTok, Riot Games, eBay and PayPal, as well as Google and Alphabet, since the start of the year. Along with layoffs last year, these cuts have helped boost the companies' already high profits even further. This has also increased their overall market values.
Since the end of 2022, the tech-driven Nasdaq composite index has risen by about 50%. This rally has brought it close to its all-time high in 2021 when the pandemic lockdowns shifted more of the economy to online services.
Cisco's shares experienced a meagre 6% gain during a period when other tech companies surged. This could have led to the decision for deeper job cuts, and almost all of that minimal gain is potentially set to disappear as Cisco's shares lost nearly 6% after hours upon the release of its recent quarterly figures and underwhelming forecast.
Cisco, like other companies, is shifting focus onto tech sectors more likely to bring future growth. This pivot has seen many tech firms reduce roles in some areas whilst creating new positions in emerging fields like AI, a field now advancing enough to take on tasks traditionally completed by humans.
Experts are suggesting that AI will eventually replace even more human roles, leading to further job losses in the future. Cisco's CEO praised the firms strong relationship with chipmaker Nvidia - a leader in AI that has become one of the world's most valuable companies over the past year.
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