TLDR: Cisco Systems to Lay Off More Than 4,000 Workers

Cisco Systems, an internet networking pioneer, is carrying out a mass layoff of over 4,000 employees. The layoffs, which account for about 5% of Cisco’s global workforce, come as part of the company’s reorganization plan. This purge follows Cisco’s previous cutbacks in 2022 that resulted in the removal of 5,000 employees. The industry-wide trend of job insecurity, driven by the increased use of artificial intelligence, has affected other technology giants such as Google and Amazon. Despite still being profitable, Cisco expects a sluggish demand for its products and software services in the coming months due to customer caution amid an uncertain economic outlook.

The layoff trend among tech companies, including Microsoft, TikTok, Riot Games, eBay, PayPal, Google, and Alphabet, has contributed to their increased profits and market values. However, Cisco’s stock price has only experienced a modest gain of 6% since the end of 2022, potentially influencing the decision to make deeper payroll cuts. In extended trading after the announcement of its quarterly results and lackluster forecast, Cisco’s shares dropped nearly 6%. Nonetheless, the U.S. economy continues to add jobs at a robust rate, with an unemployment rate of 3.7%, indicating that the layoffs are specific to the tech industry’s shifting focus towards areas of future growth, such as artificial intelligence.

As companies turn to AI, they are eliminating positions in some departments while creating new jobs in AI-related fields. Experts predict that AI will eventually be able to handle tasks that previously required human intervention, leading to further layoffs. Cisco is optimistic about its relationship with chipmaker Nvidia, a leader in AI, and expects to benefit from AI adoption. CEO Chuck Robbins believes that AI technology will position Cisco well in the market.