Cisco Layoffs Slated As Tech Giant Rebalances Business Units

Cisco says it will be addressing the headcount reduction Thursday with its employees. The tech giant also plans to shrink its real estate footprint of smaller office locations, executives said.

Cisco Systems on Wednesday said it plans to lay off employees and reduce some of its real estate as the company right-sizes some of its business units.

Cisco CEO Chuck Robbins took to the tech giant’s Q1 2023 earnings call to confirm plans to “rebalance” certain business units, including its Collaboration segment. Employees will be notified on Thursday of the coming job cuts, Robbins said.

“There’s nothing that’s a lower priority, but we are right-sizing certain businesses,” Robbins said of the company’s extensive portfolio.

The San Jose, Calif.-based company expects to recognize pretax charges of around $600 million in conjunction with its plan. The charges, which are primarily cash-based, will consist of severance and other-time termination benefits, real estate-related charges and other costs. Cisco said it expects to recognize about $300 million of these charges in its second fiscal quarter of 2023, about $200 million in the second half of fiscal 2023 and the remaining amount through the first quarter of fiscal 2024.

Cisco spokesperson Robyn Blum confirmed to CRN that the company would be undertaking a “limited business restructuring that will right-size our real estate portfolio and will impact approximately 5 percent of our workforce.”

Blum added that Cisco currently has open positions and “will do everything we can do help place affected employees in these open roles.”

“This is not about reducing our workforce - in fact we’ll have roughly the same number of employees at the end of this fiscal year as we had when we started. This decision was not taken lightly, and we will do all we can to offer support to those impacted, including generous severance packages, job placement services and other benefits wherever possible,” she said in an email to CRN.

As of July 30, Cisco had 83,300 full-time employees, according to a regulatory filing.

[Related: Cisco Partner Summit 2022: CEO Chuck Robbins’ Top 5 Quotes]

Cisco CFO R. Scott Herren added that the pending layoffs are not a headcount action driven by cost savings. “It’s a rebalance across the board,” he said.

In fact, Cisco plans to move some displaced employees into current job openings in other business units based on skills, Robbins said. “If you look at the number of jobs that we have opened in the areas that we’re trying to invest, it’s just slightly lower than the number of people that we believe will be impacted. We’re going to be working really hard to help match our employees to those roles.”

The CEO also said that Cisco would be beefing up its investment in strategic areas, including within its End-To-End Security segment.

Cisco’s Collaboration segment declined 2 percent year over year to $1.09 billion in revenue compared to Q1 2022, which the company attributed to declines in Meetings, offset by growth in Cloud Calling and Contact Center.

Robbins called the Cisco Collaboration business strong, especially in Calling and Contact Center.

“I actually am optimistic over the next 12 months about our collaboration portfolio,” Robbins said. “I think [the team] built the best platform in the business and when you look at our devices and the interoperability with Microsoft, that’s a huge thing from a customer perspective for flexibility. So, I think they’ve done a good job. And I feel I feel pretty good about that business.”

The latest Cisco layoffs news comes as a slew of tech companies have been announcing job cuts in the face of macroeconomic headwinds.