Cisco Lays Off 7% of Staff to Fund AI and Cloud Expansion
Cisco is reducing its global workforce by 7% to reallocate hundreds of millions of dollars into artificial intelligence, cloud, and cybersecurity initiatives. The tech giant reports up to $1 billion in severance costs as it pivots away from traditional business areas.
Cisco plans to lay off 7% of its global workforce as part of a major restructuring effort aimed at fueling growth in artificial intelligence. CEO Chuck Robbins states that the tech giant is shifting hundreds of millions of dollars into AI, cloud computing, and cybersecurity to stay competitive. Cisco CFO Scott Herren emphasizes that these cuts represent a reallocation of resources rather than a simple pursuit of cost savings.
The company estimates that it incurs up to $1 billion in costs related to severance and other one-time termination benefits. Cisco expects to recognize the vast majority of these charges, between $700 million and $800 million, during the first quarter of fiscal 2025. This financial hit accompanies the company's third straight quarter of declining revenues, with total sales dropping 10% to $13.6 billion in the fourth quarter of fiscal 2024.
Cisco joins a growing list of technology companies that cut jobs this year, with industry layoffs surpassing 130,000 since January according to layoffs.fyi. Analysts point out that this trend reflects a broader push for efficiency following a period of excessive hiring during the pandemic. Furthermore, the rapid rise of AI is actively disrupting the industry, forcing legacy tech giants to accelerate their transformation and restructure their operations.