Cisco Plans 4,000 Layoffs as It Focuses on AI Development

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Cisco Systems, the world's leading networking company, is preparing to lay off approximately 4,000 employees in a second round of job cuts this year, as it intensifies its focus on artificial intelligence. This move mirrors a similar layoff round from February, where around 4,250 employees were affected.

Sources close to the matter told Reuters that these layoffs might be revealed as early as next week. The period corresponds with Cisco's fourth-quarter 2024 financial earnings results announcement date of August 14. With its headquarters located in San Jose, California, Cisco employed about 85,000 people as of July 2023. The upcoming layoffs are expected to reduce the global labor force to just over 80,000 people. In response to the report, Cisco has said nothing.

About 5% of Cisco's workers was laid off in February. The business blamed the layoffs on a drop in product orders during the second quarter of its fiscal year 2024, which decreased product sales. The business affirmed that the layoffs were a component of a worldwide reorganization initiative meant to bring spending and investments into line with the macroeconomic climate of the day. Cisco projected at the time that the restructure would cost roughly $800 million, mostly for severance and other benefits associated with termination.

As Cisco shifts its focus toward AI, the company has been incorporating numerous AI products into its portfolio, with plans to generate $1 billion in AI product orders by 2025. To support this strategy, Cisco launched a $1-billion fund to invest in AI startups, including Cohere, Mistral AI, and Scale AI.

Cisco's recent moves reflect a broader trend in the tech industry, with companies like Dell Technologies also restructuring to become more agile in the AI era. Dell recently announced layoffs as part of its efforts to adapt to the evolving technological landscape.

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