Cisco Systems Inc has announced it will lay-off around 5,500 employees over the next 12 months; a large proportion of the network equipment maker’s global workforce.
Earlier credible reports had indicated that up to around 20%, or 14,400, jobs were to go, inciting controversy that the company may have leaked the news. Chuck Robbins, Cisco CEO, however described the leaked news of the lay-offs as both insulting and irresponsible.
The job cuts will begin next year as the company attempts to accelerate a major restructuring project shifting its focus onto other growth areas such as security, internet of things, collaboration and cloud services.
Cisco had previously cut jobs back in both 2014 and 2013 when the company let 6000, and 4,000 go, respectively. Cisco is one of only several high profile technology companies that has found itself struggling to attempt to adapt to the ever accelerating growth of cloud based services.
While Cisco is still considered to the last word when it comes to network hardware, it has seen demand for their products fall consistently over the last 5 years or so. The same is also true for other hardware manufacturers. IT equipment is generally lasting longer than previous generations as both people and business wait longer between upgrade cycles, as the advent of mobile applications and cloud based computing services increases. Margins in software services are also higher than hardware because they also bring an ‘evergreen’ model of recurring revenue, involve fewer people on the cost side, and also have far higher margins.
The upcoming job cuts announcement may not cover the whole story, as Cisco has allegedly already offered early retirement packages to an unspecified number of employees, perhaps in a bid to mask difficulties being faced by the business.
Cisco, declared it had more than 70,000 employees as of April this year.