Why is Cisco laying off people?

Cisco Systems has implemented multiple rounds of layoffs in 2024, impacting thousands of employees. The primary reasons for these workforce reductions include:

Strategic Shift to High-Growth Areas

• Focus on Cybersecurity and Artificial Intelligence (AI): Cisco is reallocating resources to expand its presence in cybersecurity and AI sectors, which are anticipated to drive future growth. This strategic realignment has led to workforce reductions in other areas.

Economic Challenges and Market Conditions

• Decreased Product Revenue: In the second quarter of 2024, Cisco experienced a decline in product revenues, prompting cost-cutting measures, including layoffs, to maintain financial stability.

• Anticipated Demand Slowdown: Cisco forecasts a slowdown in demand for its products and services in the upcoming months, leading to organizational restructuring to align with market conditions.

Major Acquisitions and Restructuring

• Splunk Acquisition: Cisco's $28 billion acquisition of cybersecurity firm Splunk necessitated organizational restructuring to integrate operations and eliminate redundancies, resulting in job cuts.

Industry-Wide Trends

• Broader Tech Industry Layoffs: The technology sector has seen widespread layoffs in 2024, with companies like Intel and Dell reducing their workforces. Cisco's layoffs are part of this broader trend of cost management and strategic refocusing within the industry.

In summary, Cisco's layoffs are driven by a combination of strategic realignment towards high-growth areas, economic challenges, major acquisitions, and industry-wide trends necessitating organizational restructuring.