Cisco to lay off thousands more people in second job cut this year, sources say

By Utkarsh Shetty and Supantha Mukherjee

(Reuters) – Cisco (CSCO) will cut thousands of jobs in a second round of layoffs this year as the U.S. networking equipment maker focuses on higher-growth areas including cybersecurity and AI, people familiar with the matter said.

The number of people affected could be similar to or slightly higher than the 4,000 employees Cisco laid off in February, and will likely be announced as early as Wednesday with the company’s fourth-quarter results, said the people, who were not authorized to speak publicly.

Reuters exclusively reported the job cuts announced in February by San Jose, California-based Cisco before the company announced them.

According to its annual report, the company employed about 84,900 people as of July 2023. This figure does not take into account the February layoffs.

Cisco did not immediately respond to a Reuters request for comment.

Cisco, the largest maker of routers and switches that direct Internet traffic, is facing sluggish demand and supply chain constraints in its core business.

The company has decided to diversify, including the acquisition of cybersecurity company Splunk for $28 billion, which was finalized in March. This acquisition will reduce its dependence on one-off equipment sales by boosting its subscription business.

The company has been trying to integrate AI products into its offerings, and in May it reiterated its goal of $1 billion in AI product orders by 2025. In June, it launched a $1 billion fund to invest in AI startups such as Cohere, Mistral AI and Scale AI. The company said at the time that it had made 20 AI-focused acquisitions and investments in recent years.

The layoffs are the latest in the tech sector, which has been cutting costs this year to offset heavy investments in AI.

More than 126,000 people have been laid off at 393 tech companies since the start of the year, according to data from tracking site Layoffs.fyi.

In early August, chipmaker Intel cut more than 15% of its workforce, or some 17,500 people, as it tried to turn around its loss-making manufacturing business.

(Reporting by Utkarsh Shetty in Bengaluru and Supantha Mukherjee in Stockholm; Editing by Rod Nickel)