What to Know About New Cisco Layoffs, Ongoing Restructuring Plan

News of Cisco layoffs are trickling out of social media and online forums this week as the IT company seeks to move resources to priority areas of its business.

Cisco officials confirmed to Channel Futures that layoffs have taken place this week, although they noted that the cuts tie back to the restructuring plan the vendor announced almost a year ago. Official sources have not confirmed the scale or scope of the layoffs, and the number of employees impact would appear to fall below the thresholds for a mandated SEC filing.

Notably, Cisco Application Centric Infrastructure (ACI), data center and collaboration/Webex units have seen an impact. Posters on Blind and TheLayoff.com reported plans by Cisco to “dissolve” its Customer Experience Center in Raleigh, North Carolina, and move jobs to Cisco’s San Jose Customer Experience Center. Other units listed on Blind include Cisco Security Business Group and Cisco Servers. A director in Cisco’s Security Business Group wrote on LinkedIn that she and 10 teammates are losing their jobs.

As of Thursday afternoon, Channel Futures has not observed any posts about channel managers seeing an impact.

A manager for Cisco’s collaboration technology team also reported that he has been impacted. Channel Futures reported last year that cuts would likely come to the collaboration business, which declined 13% year-over-year in revenue last quarter.

Making Sense of the Cisco Layoffs

The layoffs follow a restructuring plan Cisco announced last November. CEO Chuck Robbins said the company was “right-sizing certain businesses.”

Cisco’s Chuck Robbins

“We’re really focused on resources moving into [areas] like the enterprise networking space, accelerating our platform strategy,” Robbins said on a November earnings call.

Cisco’s networking business grew 29% year-over-year in revenue last quarter.

The plan would reduce approximately 5% of Cisco’s workforce and change its real estate footprint.

The plan entailed about $300 million in severance, termination benefits and real estate charges in the second quarter of fiscal year 2023 (Oct. 30, 2022-Jan. 28, 2023) and in the second half of the fiscal year (Jan. 30, 2023-July 29, 2023).

“… As we announced then, this is not about cost savings as we have roughly the same number of employees as we did before the process began,” a Cisco spokesperson told Channel Futures in an email. “This rebalancing is about prioritizing investments in our transformation, to meet and exceed our customers’ expectations in the changing technology landscape. We will continue to do everything we can to help place affected employees in open roles and offer extensive support including generous severance packages.”

The first widely publicized round of layoffs occurred in December, with Cisco giving approximately 670 California workers the option of leaving in February or March. Those people included technical personnel and engineers and marketing managers.

ZK Research principal analyst Zeus Kerravala said this year’s layoffs both resemble and differ from previous moves Cisco has made over the years.

ZK Research’s Zeus Kerravala

“Cisco acquires companies every year, and then when the fiscal year comes to a close, they typically do some rationalization of staff,” Kerravala told Channel Futures. “What’s slightly different this year is the company has laid off a broader set of people, not to reduce headcount, but to reallocate.”

Kerravala added that Cisco management is first and foremost seeking to “move people internally” to different parts of the business.

“Where that can’t happen as the skills may not align, they will reallocate. As an example, the company is looking to invest more in security, as that’s viewed as a key growth area, given its product innovation. We will likely see headcount from a well-established area, like collaboration, reduced and then added to headcount. I believe there will be minimal impact to Cisco’s overall headcount but the people moved around optimize the business operations. In reality, it’s something all companies should do. The right people have to be in the right places to have the company perform best.”