Cisco Systems is laying off about 14,000 employees, almost one-fifth of its global workforce. The San Jose, California-based company is expected to announce the job cuts in the coming week. According to sources, Cisco job cuts stem from its transition as a hardware company to a software-centric company.
Cisco, which has over 70,000 employees, has declined to comment.
Last year, it opened new offices in the East London Tech City in the UK. It came after it promised to invest over $1 billion in the UK over the next three to five years. Its office in the technology cluster created over 200 jobs. In fact, the combined headcount of Cisco employees in the UK crosses 7,000 employees. Cisco considers the UK as its second largest market.
Cisco CEO Chuck Robbins, who took leadership in July 2015, has made efforts to boost growth and revenue. In recent months, Cisco has been making active investments in new products. This includes cloud-based tools for data centers and data analytics software. It is also venturing towards security and management tools, which are less expensive and more resourceful. The investment will help Cisco offset the impact spending by telecom carriers and businesses on its network switches and routers.
Cisco will report Q4 earnings on Wednesday after the close in New York. Financial analysts project a 2 percent decline in sales to $12.6 billion.
CISCO TO CUT 14,000 JOBS
The new emphasis on software now requires staff with a different skill set. This is why Cisco is offering early retirement package plans to employees. Last time Cisco announced job cuts was in August 2014 at 6,000 layoffs.
In recent months, Cisco has been making acquisitions of companies in the electronic devices business. Take for example, the Jasper Technologies acquisition for $1.4 billion.
Reports released in May 2016 showed sales growth of around 3 percent, compared to analysts’ forecasts of a revenue steep. Robbins says Cisco has a long way to go, and the earnings aren’t where they should be.
Cisco’s Q3 2016 sales of its biggest division switching show a 3 percent drop from the year earlier in sales of $3.45 billion. Its second largest division routing showed a 5 percent drop in sales to $1.89 billion. The new units, including security, and service-provider video collaboration, could bring a 10 percent increase in sales.
TECH LAYOFFS SO FAR
A lot of other tech giants, including Microsoft, HP, and Intel have announced layoffs. This comes from the sluggish PC sales as the PC industry faces a decline. In July 2014, Microsoft announced one of the biggest tech layoffs, at 18,000 job cuts. In September 2015, HP announced that it expected to slash 33,300 jobs over the period of next three years. In April this year, Intel announced 12,000 layoffs globally or 11 percent of its global workforce.
Founded in 1984, Cisco is an enterprise networking hardware company. It is known for making computer and telecoms switches and routers, which are basically the backbone of the networked world.