Digital communications multinational Cisco has begun cutting jobs from its 80,000-strong workforce, as it announced it would do in mid-November.
Four-thousand workers are expected to lose their positions in a shake-up that includes office space sell-offs, employee reshuffles and rejuvenated targeting of security and networking.
The planned layoffs follow a highest-ever revenue for Q1 with its Q4 2022 results leaving them ahead on revenue with $13. 10 billion, higher than the expected $12.73 billion. Despite this, overall revenue was down 6% to $2.82 billion.
Ex-Workers Report Job Losses
Employees who had lost their jobs announced their redundancies on TheLayOff.com and Blind while looking for advice on tech jobs and severance payments.
One disgruntled anonymous ex-employee on TheLayOff.com commented that during their time at the firm: “It was common knowledge that Cisco applies forced ranking and “manages out” the “bottom 5%” every year.”
Forced ranking is a system where staff are rated from best to worst based on their performance.
Cisco CFOP Scott Herren had already explained that “this really is a rebalancing” in last month’s earnings call with analysts and investors. In a company statement, Cisco said:
“We didn’t take this decision lightly, and we will offer those impacted extensive support, including generous severance packages”.
“Rightsizing Certain Businesses”
Chuck Robbins, Chairman and CEO of Cisco, previously stated in its quarterly conference call that he was not giving out details until the firm could talk to the employees concerned.
But he added: “What we’re doing is rightsizing certain businesses… There’s nothing that’s a lower priority, but we are rightsizing certain businesses.”
The action to start sacking staff comes when the tech world braces itself for an imminent global recession.
Describing a world economic downturn is tricky as there has to be conclusive criteria such as a six-month period of economic contraction, consumer spending slowdown and unemployment spikes.
With the recent layoff announcements at a time when other big tech firms have announced cuts, it seems a recession is definitely on the cards.
Tech Firm Layoff Trend
This month alone, 35,000 workers across 72 technology companies have been laid off. According to the redundancy tracking website www.layoffs.fyi, 965 tech companies have let go more than 150,000 workers so far this year.
Last week Meta laid off around 13% of its staff — 11,000 workers. The company blamed overhiring during the pandemic while CEO Mark Zuckerberg admitted in a post on its corporate website: “I got this wrong, and I take responsibility for that”.
Twitter also announced job losses amounting to around 50% of its workers, with 3,700 jobs going.
Back in October, Microsoft announced structural changes as it relinquished 1,000 staff from across a variety of its departments.
In September, Avaya announced it would be looking to cut jobs as it looks to save $225m and $250m annually.
Cisco’s Approach to the Markets
With so many tech firms preparing for turbulent economic times, the pre-announced move of Cisco to cut staff and shut down offices has been largely viewed positively by investors. Since mid-November, Cisco’s share price has seen a steady rise of more than 10%.
In an effort to score environmental brownie points, Cisco has promised to reach net zero GHG emissions by 2040 across its value chain.
According to the stock market site Market Screener, it intends to achieve this by “reducing absolute scope 1, 2, and 3 GHG emissions 90% from an FY2019 base year, and neutralizing any remaining emissions by removing an equal amount from the atmosphere”.
