Cisco to lay off over 4,000 workers as global tech job cuts hit 32,000 in 2024

Yunusa Umar

Computer Information System Company (Cisco) an industry-leading portfolio of technology innovations, has announced that more than 4,000 workers representing 5% of its 85,000 global workforce would be laid off.

This was disclosed by the company on its second quarter results which ended January 27, 2024. The company further stated that the job cuts are for its company to realign its business and boost investment in key priority areas.

The company’s total revenue was down 6 per cent, to $12.8 billion, with product revenue down 9 per cent and service revenue up 4 per cent. The company also recorded a decline in revenue across its operations with revenue from the Americas down 4 per cent, EMEA down 7 per cent, and Cisco APJC down 12 per cent.

Speaking on its restructuring plans which would lead to the exit of a number of workers, Cisco in its earning report, said:

“On February 14, 2024, Cisco announced a restructuring plan to realign the organization This restructuring plan will impact approximately 5 percent of Cisco’s global workforce. Cisco currently estimates that it will recognize pre-tax charges to its GAAP financial results of approximately $800 million consisting of severance and other one-time termination benefits and other costs.

The company said these charges are primarily cash-based and it expects to take the majority of these actions in the third quarter of fiscal 2024. For now, it would recognise up to $500 million of the charges while expecting approximately $150 million of these charges to be recognized in the fourth quarter of fiscal 2024. The remaining amount of these charges ($150 million) would be recognised primarily through the first half of fiscal 2025.

Weak demand behind CISCO’s poor results

In a conference call, Cisco CEO, Charles Robbins said the company’s performance was weakened by low demand for its equipment after earning release. Analysts expect demand for Cisco’s products to remain under pressure, as clients in the telecom industry restrict spending, prioritizing clearing their excess inventory of networking gear.

The shares of the equipment company declined more than 5% in extended trading on Wednesday, after Cisco cut the forecast to $51.5 billion to $52.5 billion from $53.8 billion to $55 billion, which it projected earlier.

Cisco’s impending layoffs add to the growing number of global tech companies that have been announcing job cuts since the beginning of this year. Last year, 2023, many big tech companies such as Amazon, Microsoft and Google among others have laid off thousands of workers this year.

According to Layoffs.fyi, which tracks tech industry job cuts, more than 70 tech companies have let go over 32,000 employees so far this year. Earlier in the month, Snap trimmed its global workforce by 10 per cent, a move which affected about 500 employees at the time.

This was part of the social media company’s move to address a slowdown in ad revenue. It also implemented other measures such as discontinuation of projects deemed less essential. The parent company of Snapchat, alongside Meta Platforms Inc., faced challenges following Apple Inc.’s privacy policy changes in 2021, impeding advertisers’ ability to track users effectively.

While Meta rebounded with an impressive 25% increase in sales during the fourth quarter, Snap is now streamlining its operations. The California-based company, with approximately 5,400 employees as of September, anticipates a workforce reduction of about 10%, translating to around 540 jobs lost.

Similarly in January, online retailer, eBay announced plans to lay off about 9 per cent of its entire workforce or 1,000 full-time employees. According to CEO, Jamie Iannone, this was part of the company’s plan to be “more nimble” in the face of a “challenging” economic environment. This will include plans to scale back on contract staff and replace them with alternate workforce in the coming months.

“While we are making progress against our strategy, our overall headcount and expenses have outpaced the growth of our business. To address this, we’re implementing organizational changes that align and consolidate certain teams to improve the end-to-end experience, and better meet the needs of our customers around the world,” the CEO explained.

See also: Snap lays off over 500 employees as it trims global workforce by 10%