Cisco’s 5,500 job cuts lower than earlier fears

18 Aug 201622 Shares

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After earlier fears that Cisco would be cutting 14,000 people (or some 20pc) of its global workforce, the company is reportedly actually cutting 5,500 roles (7pc).

Employing some 300 people in Ireland at the moment, the 20pc figure caused such shock around the world that these 5,500 job cuts seem almost palatable.

Following an earnings call, Cisco CEO Chuck Robbins posited that the reduction in staff will be in “slow growth” areas, allowing the company to reposition itself and essentially become leaner.

That means Cisco’s legacy and routing business, which represented almost half of the company’s 2015 revenues, is in the crosshairs.

Cisco optimising

The restructuring is expected to enable Cisco to “optimise its core base in lower growth areas” of its portfolio, according to Robbins, with future investment in security, internet of things, collaboration, next-generation data centres and cloud planned.

“We expect to reinvest substantially all of the cost savings from these actions back to the businesses and we’ll continue to aggressively invest to focus on our areas of future growth.”

This is all part of an industry-wide shake-up as hardware providers continue to feel the pinch, with software providers instead enjoying this stage of the digital revolution.

According to Reuters, some 63,000 jobs have so far been shed in tech companies in the US this year.

“The hi-tech industry is going through a serious deconstruction,” said Trip Chowdhry, an analyst at Global Equities Research. “There is more pain to come.”

Cutting-room floor

Already this year we have seen PCH – a design manufacturing company – reveal plans to cut 1,500 jobs in China, reducing its headcount to just 600.

Speaking with Siliconrepublic.com, Liam Casey, PCH’s CEO and founder, said the decision was positioning the 20-year-old company for the next 20 years.

Elsewhere, Microsoft is culling 1,850 from its empire as it finally admits defeat in its costly Nokia smartphone punt from a few years back.

Seagate is reducing its headcount by 6,500 by the end of next year amid a global PC slump. CEO Steve Luczo said that the company is repositioning itself for a post-PC era in a move that echoes a similar repositioning by chip giant Intel.

“The evolution of mobile and cloud-data-driven environments continues to define itself as requiring significant amounts of mass storage,” Luczo said.

“HDD devices are where most data bits ultimately reside and our record HDD exabyte shipments in the June quarter, particularly due to enterprise demand, continue to support this thesis.”

That Intel reference relates to the April news that it was cutting 12,000 jobs worldwide.

Main Cisco image via JPstock/Shutterstock

Gordon Hunt is senior communications and context executive at NDRC. He previously worked as a journalist with Silicon Republic.

editorial@siliconrepublic.com