Tech Layoffs Intensify: Cisco Cuts Over 1,000 Jobs In Second Layoffs Of 2024, Shifts To AI Investments

Cisco, the US tech conglomerate, has announced a major round of layoffs amid declining demand and ramping up investments in artificial intelligence (AI). This latest round of job cuts follows a previous round earlier this year.

Cisco's recent decision involves laying off thousands of employees, coming on the back of a similar announcement in August. Earlier this year, Cisco cut approximately 7% of its workforce, equating to around 5,600 employees, following an earlier round of layoffs affecting 4,000 workers in February. These moves are part of a broader restructuring strategy aimed at reducing costs and reallocating resources toward high-growth sectors.

The company's workforce, which stood at around 85,000 at the end of its last fiscal year, is now being reduced. The restructuring plan is expected to incur substantial costs, estimated between $700 million and $800 million in the first quarter of the fiscal year. Overall, Cisco anticipates these restructuring costs could total up to $1 billion before taxes.

Cisco's restructuring aligns with its broader strategic shift towards emerging technologies, particularly AI. In March, Cisco made headlines with its $28 billion acquisition of cybersecurity firm Splunk, marking a notable move into the subscription-based services sector.

The tech giant is also investing heavily in AI, having allocated $1 billion to support AI startups. Since 2018, Cisco has been active in the AI space, making several acquisitions and investments to strengthen its position. These include notable investments in AI startups such as Cohere, Mistral AI, and Scale AI. Additionally, Cisco's partnership with Nvidia, established earlier this year, involves integrating Cisco's Ethernet technology with Nvidia's data centre and AI applications.

Cisco's strategic shift towards subscription-based services is exemplified by its acquisition of Splunk. This move represents a departure from Cisco's traditional emphasis on networking hardware, positioning it alongside other key players in the cybersecurity market such as Palo Alto Networks, Check Point, and CrowdStrike.

Moreover, Cisco's investment in cybersecurity has been ongoing for years. Since its acquisition of Sourcefire in 2013, Cisco has continually expanded its security portfolio. This includes the purchase of OpenDNS in 2015, which offers cloud-based threat detection and prevention, and CloudLock acquired for $293 million, which provides cloud security solutions. The acquisition of Duo Security for $2.35 billion further strengthened Cisco's offerings in cloud-based authentication and access control.

The tech sector has been experiencing a wave of layoffs this year, with over 27,000 job cuts reported in August alone. This trend continues with major tech companies, including Intel, IBM, and numerous startups, announcing reductions in their workforce. The total number of tech layoffs this year has surpassed 1,36,000 across 422 companies.