Cisco Systems has announced a significant workforce reduction, impacting nearly 4,000 employees, as part of a strategic restructuring to accelerate its focus on artificial intelligence and other high-growth sectors. The decision comes despite the company reporting strong financial results.
What happened
Cisco announced on Wednesday that it would cut fewer than 4,000 jobs, representing less than 5% of its global workforce. Layoff notifications began on Thursday. This restructuring is intended to reallocate investments towards emerging technologies, particularly artificial intelligence.
How many employees affected
The company is reducing its workforce by nearly 4,000 positions, which accounts for less than 5% of its total employee base. Cisco had approximately 86,200 employees as of July 26 last year.
Why layoffs happened
CEO Chuck Robbins stated that the layoffs are a "hard decision" reflecting Cisco's strategy to win in the "AI era." The company is shifting investments towards areas with strong demand and long-term value creation, including AI infrastructure, silicon, optics, and security. This move aims to scale down roles in selected areas while increasing focus on AI.
Company background
Cisco Systems is a San Jose-based networking company. It operates development centers globally, including a significant presence in Israel, focusing on cloud security, chips, and network automation.
Industry impact
Cisco's layoffs align with a broader trend in the technology sector where companies are reallocating resources towards AI despite often reporting healthy revenues. This reflects a strategic pivot across the industry to prioritize AI development and infrastructure.
What's next
Cisco expects the restructuring to incur pre-tax charges of up to $1 billion, primarily for severance and benefits, with approximately $450 million recorded in the fourth quarter of fiscal 2026. The company has committed to supporting affected employees with severance packages, prorated FY26 bonuses, and assistance in finding new opportunities.
Source: foxbusiness.com