Splunk has laid off seven percent of its global workforce shortly after the announcement of Cisco’s intent to acquire Splunk for $28 billion.
In a message to employees, Gary Steele, President and CEO of Splunk, said the job cuts were the result of “ongoing market uncertainty”.
Based on the 8,000 employees Splunk had in January 2023, it will be letting go of approximately 500 employees. Earlier this year, Splunk reduced its workforce by four percent, which adds a further 300 employees to the attrition this year.
Steele specifically ruled out Cisco’s acquisition of the company as having any impact on its decision to make these redundancies: “Today, we are making the difficult decision to reduce our global workforce by approximately 7 percent.
“As we work to finish FY24 and look ahead, we are taking this proactive and strategic step that further aligns our workforce to better enable Splunkers to meet the needs of our customers and partners while remaining sustainable and cost-effective.
The changes we are announcing are not a result of our agreement with Cisco; they are the continuation of the important initiatives we’ve undertaken across Splunk for more than a year to align our resources and operating structure to deliver ongoing and incremental value for our customers.
According to a filing with the SEC, most of the affected employees are based in the U.S. and will be given severance and healthcare packages.
Splunk will have to pay around $42 million in restructuring costs, most of which are due to take place before May 2024.
Steele shared his appreciation for the “hard work and passion” that everyone has given to the company and its customers, and he called for “empathy, kindness, and camaraderie”over the days ahead.
Industry-Wide Layoffs
Steele’s explanation of the redundancies deriving from the unpredictable state of the markets certainly tracks from an industry perspective.
The technology sector has been riddled with layoffs for over a year now, which have impacted Cisco too.
Indeed, Cisco recently added to the job cuts it first began in December 2022, which equaled roughly five percent of its workforce.
News of the Cisco acquisition and the subsequent uptick in its share price have clearly not been enough to stave off this round of layoffs.
Steele reflected on the company’s position in relation to the wider markets: “We’ve made significant progress since the beginning of FY23, delivering on our strategy to help organizations worldwide become more resilient while also improving our operating model to drive long-term durable growth together with increasing profitability.
“That said, the overall market has retracted, and we expect the macro environment will continue to be unpredictable for the foreseeable future.
As we look ahead, it is important that we continue to evolve our organizational design to empower Splunkers worldwide to deliver results efficiently and more sustainably, all the while improving our ability to navigate ongoing market uncertainty.
Nevertheless, Cisco’s acquisition of Splunk, due to be completed by the end of the third quarter of 2024, will enable the two companies to become “a global security and observability leader”, Steele said at the time of the agreement, just over six weeks ago.
