Cisco Systems Inc. is preparing for a significant reduction in its workforce, with plans to cut 4,000 or more jobs. This was preceded by a similar event earlier in the year when the company decided to let go of 4,000 of its employees, which actually accounts for 5% of its entire workforce.
The announced dismissals are connected to the decrease in the number of orders, as well as the focus on a new promising direction, including AI. This round of lay-offs may be accompanied by next week’s Cisco fourth-quarter earnings report, which is expected on Wednesday this week.
Cisco ramps up AI investments and sets ambitious goals
The total headcount as of the end of fiscal 2023 is almost 85,000, depending on the new cuts being less or more than the February cuts. Cisco has recently been ramping up its AI spending to lay the groundwork for growth. The firm plans to capture $1 billion in AI product bookings by fiscal year 2025.
Cisco acquired Splunk, a cybersecurity firm, for $28 billion in March. Following the acquisition, Cisco’s shares gained 4% in early trading on May 16, 2024, because of increased estimates of demand in Q4 and the perceived advantages of the cybersecurity deal.
This focus on AI echoes what is happening in other technology companies around the world. Larger tech firms such as Meta and Google are incorporating it into their applications. It has been estimated that by the year 2030, AI could generate as much as $3.5 to $15.7 trillion of the total global economy.
Tech industry faces widespread layoffs and restructuring
Cisco is the latest company to join the bandwagon and implement layoffs in the organization. Dell Technologies reported the slashing of thousands of jobs this year. Similarly, according to reports, Intel is planning to eliminate 15,000 positions.
Layoffs.fyi stated that there has been significant downsizing in the tech industry this year. Currently, 397 firms have downsized, resulting in the firing of 130,482 employees this year. In contrast, 1,193 firms reduced employment by 264,220 in 2023.
Notably, the integration of AI is progressing faster all across the globe, and Africa is encountering major issues. According to a recent report by Oxford Insights in 2023, African countries are least prepared for AI. Additionally, the Sub-Saharan countries are the least prepared and are ranked 21 of the 25 least-prepared countries for AI.