Cisco plans to lay off approximately 4,250 employees, or about 5% of its global workforce.
According to the company, this is part of its restructuring plan. They intend to reorganize its plan structure and invest in other critical priority areas.
It seems that 2024 won’t be any different. An additional round of layoffs started this year, with over 35,000 jobs lost in the first two months alone.
Cisco has not only announced the layoffs but also reported strong second-quarter results with revenue of $12.8 billion, but with a light forecast.
According to a statement, Cisco’s revenue for the quarter ending on January 27 decreased by 6% year over year. From $2.77 billion, or 67 cents per share, in the same quarter last year, net income dropped to $2.63 billion, or 65 cents per share. The $28 billion purchase of Splunk, a provider of security and monitoring software, by the firm is still pending. According to CEO Chuck Robbins, Cisco now plans to close the purchase late in the first calendar quarter or early in the second. He made this announcement during a conference call with analysts.
Why does Cisco need to restructure?
Cisco has given two reasons why its management felt compelled to look into this restructuring: a weak demand and a tough economy.
Cisco is not alone. Numerous other companies follow Cisco’s model. Approximately 35,000 workers have been laid off by 144 tech companies so far this year. The gist of the companies that are making layoffs this year is shown below.
- Nike plans to cut 1,700 jobs worldwide, or 2% of its total staff, to save $2 billion over the next two years. The company will focus on its three main markets: Women’s Apparel, Running, and Jordan Brand.
- Paramount is cutting off approximately 800 people, or roughly 2% of the workforce. This is intended to accelerate its move from TV to streaming.
- Snapchat is laying off approximately 500 employees, or roughly 10% of its staff. The company claims it is to reduce the hierarchy.
- Grammarly is laying off 230 employees. The corporation says it wants to focus on an AI-driven future.
- Instacart is laying off its 250 employees.
- Mozzila is cutting 5% of its jobs.
- Paypal has started companywide layoffs.
- Spicejet will lay off 1,400 people.
- Swiggy is cutting some 400 jobs.
- Vroom is laying off 90% of its workforce.
- Pixar is cutting some 300 people from its workforce.
- More companies are likely to join soon.
When asked why these layoffs, the CEO of Meta said that companies have come to understand the advantages of being lean. Zuckerberg has, of course, mentioned the tech sector.
When the pandemic struck, many companies grew too fast, especially tech companies. But soon word opened, people returned to normalcy, the economy adjusted, and demand went back to normal. But since the companies have already grown and are big, this is the correction, and now they are cutting jobs to save costs. They are trying to achieve efficiency.
Will this layoff continue throughout the year?
The world economy is slowing down, with modest growth and some big economies experiencing recessions or preparing for one. Prices are being driven by inflation; businesses and consumers alike are keeping an eye on their wallets.
There are two sides to this story: artificial intelligence and the pursuit of profits through cost reduction. The automation of jobs is making humans obsolete.
Many people have lost their jobs due to AI but it is also creating new jobs. Many tech giants like Meta, Microsoft are hiring people for more AI focused roles.
Mass layoffs dominated last year’s news, but it appears that cost-cutting is the dominant topic this year as well.
