Cisco to layoff more employees 6 months after firing 4,000 to focus on AI, others

Global tech service provider, Cisco (Computer Information System Company) will likely cut thousands of jobs in a second round of layoffs this year. According to an exclusive report, the layoffs are owing to the fact that the U.S. company is shifting focus to higher-growth areas, including cybersecurity and AI, people familiar with the matter said.

The number of people affected could be similar to or slightly higher than the 4,000 employees Cisco laid off in February and will likely be announced as early as Wednesday with the company’s fourth-quarter results, the sources said.

The largest maker of routers and switches that direct internet traffic, has been grappling with sluggish demand and supply-chain constraints in its mainstay business.

Recall that Cisco announced the layoff of more than 4,000 workers representing 5% of its 85,000 global in February. As disclosed in its second-quarter results, the company further stated that the job cuts will help realign its business and boost investment in key priority areas.

The company had to diversify with moves such as its $28-billion buyout of cybersecurity firm Splunk, which it completed in March. The acquisition will reduce its reliance on one-time equipment sales by boosting its subscription business.

The company has been trying to incorporate AI products in its offerings and in May reiterated its target of $ 1 billion worth of AI product orders in 2025. In June, it launched a $1-billion fund to invest in AI start-ups such as Cohere, Mistral AI and Scale AI. The company said that it had made 20 AI-focused acquisitions and investments in the last several years.

The company employed around 84,900 people as of July 2023, according to its annual filing. That number does not account for the February layoffs.

Layoffs in the tech space

According to data by Layoffs.fyi, tech companies have laid off 90,916 employees year-to-date led by 317 companies, which is half the number reported during the same period last year.

After peaking at the end of 2022 (165,269) and the beginning of 2023, the wave of tech industry layoffs has gradually weakened. However, 2023 still marked the highest number of layoffs ever recorded in the industry.

According to Layoffs.fyi data, in 2023 alone, tech companies laid off almost 263,000 people, driven by industry giants like Google, Meta, Microsoft, and Amazon. This year, the trend appears to be slowing, with significantly fewer job cuts reported.

Over the past five months, 330 tech companies have implemented cost-cutting measures, leading to job cuts almost three times less than in the same period last year.

An analysis by months shows that nearly 60% of all job cuts, or roughly 50,000, occurred in January and April, the two worst months for tech layoffs in 2024.

January alone saw over 31,000 job cuts, less than half of the figure reported in January 2023. April brought another 22,000 layoffs, slightly more than the 20,000 reported in April 2023. The downsizing trend continued in May, with 9,654 job cuts, which is 5,000 fewer than in May 2023.

Jumia, Alerzo, Renmoney top the list for Africa

The African tech sector has faced substantial layoffs since 2020, with Nigerian eCommerce platforms like Jumia and Alerzo, together, laying off up to 1,300 employees, and Nigerian startups leading the list with 13 out of 23 most notable layoffs, according to data collected by Businessfinancing.co.uk. 

Like the rest of the world, Africa’s tech scene has witnessed phenomenal growth. But, significant layoffs have also taken place in the last 3-4 years. The most notable ones are: 

• Fintech company Renmoney also let go of 391 sales staff in April 2020, as it moved to carry out lending and other services with new technologies.
• Jumia, an e-commerce platform, laid off up to 900 employees, saying “We expect these headcount reductions to allow us to save over 30% in monthly staff costs starting from March 2023.”
• Online marketplace Alerzo laid off staff twice: in June 2023 (400 employees) and November 2023 (100 employees) with the company’s chief financial officer Harish Venkatesh saying the decision was to reduce headcount was done “in discussion with our supplier partners and their market views along with investors and management in an accelerated manner to get us to profitability by summer.”

The COVID-19 pandemic, coupled with a more cautious economic climate, triggered a wave of layoffs across the tech sector. A quieter force has been silently reshaping the industry: the rise of Artificial Intelligence (AI).