Cisco Systems to lose fifth of global workforce, says report

4 years, 6 months ago - August 17, 2016
About 14,000 jobs could go, as networking company moves away from hardware to focus on software and cloud technology

Cisco Systems is reportedly planning to cut about 14,000 jobs, representing nearly 20% of the US technology company’s global workforce.

San Jose, California-based Cisco was expected to announce the cuts within the next few weeks as part of a transition from its hardware roots into a software-centric business, technology news site CRN reported, citing sources close to the company.

Cisco, which had more than 70,000 employees as of 30 April, declined to comment.

In November 2015, the company opened new offices in the UK, based near London’s Silicon Roundabout tech cluster, after promising to invest more than $1bn (£770m) in the UK over the next three to five years.

The new London site, which created more than 200 jobs, is one of six Cisco has in Great Britain, with a combined headcount of up to 7,000 employees. The company says the UK is its second largest market.

Cisco has been investing in new products such as data analytics software and cloud-based tools for data centres to offset the impact of sluggish spending by telecom carriers and enterprises on its main business of making network switches and routers.

The company has already offered many early retirement package plans to employees, according to CRN.

Cisco increasingly required “different skill sets” for the “software-defined future”, as it pushed to capture market share and boost margins, the CRN report said, citing a source familiar with the situation.

Founded in 1984, Cisco is traditionally known for its enterprise networking hardware: the huge racks of computer and telecoms switches and routers that form the backbone of the networked world.

But the profit margin on such hardware has been eaten away by commodity providers such as Taiwan’s Edimax Technology, forcing Cisco to seek greener pastures elsewhere. As part of its UK investment, Cisco is putting $150m into “internet of everything” startups, the company’s name for its attempt to gain a foothold in the burgeoning internet of things sector.

Up until Tuesday’s close of $31.12 on the Nasdaq, the company’s stock had risen about 15% in 2016, compared with a 10.5% increase in the Dow Jones US Technology Hardware and Equipment index.

Text by Guardian

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