Cisco Systems, a leader in internet networking, is letting go of over 4,000 workers. This follows a trend among technology companies, which has led to increased profits and stock prices. However, it also serves as a reminder of the uncertain job market in an industry that is increasingly relying on artificial intelligence.

Cisco’s latest quarterly earnings report revealed that they will be laying off approximately 5% of their global workforce, which currently stands at 84,900 employees. This decision comes after a previous round of layoffs in late 2022 that resulted in 5,000 job cuts. Additionally, the company plans to finalize their acquisition of Splunk for $28 billion by April 30. The reorganization process is estimated to cost an extra $800 million for Cisco, a well-known leader in internet technology.

The double whammy of two big layoffs in two years has been a phenomenon affecting other prominent technology companies, such as Google and Amazon, both of which have trimmed their once-steadily growing payrolls multiple times since the end of 2022.

The reductions are being made even though most of the companies are still big moneymakers. Cisco, which is based in San Jose, California, earned $2.6 billion, or 65 cents per share, during its fiscal second quarter covering October-January, a 5% decrease from the same time during the previous year. Revenue for the period fell 6% from the prior year to $12.8 billion.

According to CEO Chuck Robbins, Cisco anticipates a decrease in demand for its products and software services in the coming months as customers adopt a more cautious approach due to an uncertain economic future. This was mentioned during a conference call with analysts on Wednesday.

Cisco has recently undergone a restructuring process, which comes after several notable downsizings at various companies including Microsoft, TikTok, Riot Games, eBay, PayPal, Google, and Alphabet. These layoffs, combined with those from last year, have contributed to the companies’ increased profits and boosted their overall market worth.

Since the end of 2022, the tech-driven Nasdaq composite index has soared by about 50% in a rally that has put it back within reach of its all-time high hit in 2021 when pandemic-driven lockdowns shifted more of the economy to online services.

However, Cisco’s stock value has only increased by 6% in that time frame. This could be a contributing factor to the company’s choice to implement more significant reductions in their workforce compared to other tech companies. Unfortunately, most of that modest gain is likely to disappear as Cisco’s stocks dropped nearly 6% in after-hours trading on Wednesday following their latest financial report and underwhelming predictions.

Even as the tech industry experiences a series of job cuts, the United States economy has consistently gained employment at a strong pace, resulting in an unemployment rate of 3.7% – the lowest it has been in over 50 years.

Similar to other companies in its industry, Cisco is also honing in on the sectors of technology that are expected to drive future expansion. This shift has caused many tech companies to cut positions in certain departments, while simultaneously increasing opportunities in the emerging field of artificial intelligence (AI). As AI continues to advance and gain knowledge, it is able to take on tasks that previously could only be done by humans.

It is predicted by experts that AI will eventually have the capability to accomplish even greater tasks, resulting in more job cuts for individuals who will no longer be needed for employment in the future.

Robbins praised the strong partnership between Cisco and Nvidia, acknowledging Nvidia’s dominant role in the field of AI and its impressive growth as one of the top companies in the world over the past year. This partnership indicates that Cisco will also be in a advantageous position to take advantage of this technology.

Robbins stated that we greatly benefit from implementing AI.

Source: wral.com