Cisco to Lay Off Thousands Amid Strategic Shift to AI and Cybersecurity

Cisco, the leading networking equipment giant, is preparing for another major round of layoffs, potentially affecting around 4,000 employees. This follows a similar layoff earlier in February 2024, bringing the total number of jobs cut this year to approximately 8,000. The decision is part of Cisco’s broader strategy to pivot towards higher-growth areas such as cybersecurity and artificial intelligence (AI), amid declining demand for its traditional networking hardware.

The layoffs are seen as a critical component of Cisco’s effort to realign its resources and focus on sectors with more robust growth potential. The company has been facing challenges in its core business, including supply chain constraints and a slowdown in demand for its routers and switches. In response, Cisco is doubling down on AI and cybersecurity, areas it believes will drive future growth.

To this end, Cisco recently completed a $28 billion acquisition of Splunk, a leading cybersecurity firm, aimed at strengthening its subscription-based business model. The move is expected to reduce Cisco’s reliance on one-time hardware sales and create a more stable revenue stream. Furthermore, Cisco has been aggressively investing in AI, setting a target of $1 billion in AI product orders by 2025. The company has also launched a $1 billion fund to invest in AI startups, demonstrating its commitment to being a key player in the AI space.

The upcoming layoffs will likely reduce Cisco’s global workforce to just over 80,000 employees. This restructuring is not only a response to current economic pressures but also a strategic move to reallocate resources towards high-priority areas. The company has already taken significant steps in this direction, including making 20 AI-focused acquisitions and investments in recent years.

Cisco’s focus on AI is also reflected in its partnerships with emerging AI startups like Cohere, Mistral AI, and Scale AI. These investments are aimed at enhancing Cisco’s AI capabilities and integrating AI products into its existing offerings, further solidifying its position in this rapidly evolving field.

Cisco’s layoffs are part of a larger trend in the tech industry, where companies are increasingly cutting costs to offset large investments in AI. According to industry data, over 126,000 employees have been laid off across 393 tech companies since the beginning of 2024. Companies like Dell Technologies have also announced layoffs as part of their efforts to streamline operations and become more agile in the AI era.

Cisco’s latest round of layoffs underscores the company’s strategic shift towards AI and cybersecurity, areas it views as critical for future growth. While these job cuts are unfortunate, they reflect the broader changes occurring in the tech industry as companies navigate the challenges and opportunities presented by emerging technologies. As Cisco continues to invest heavily in AI and cybersecurity, it remains to be seen how these strategic moves will shape its future in an increasingly competitive landscape.