Is the American equipment manufacturer and service provider Cisco’s business in trouble? I’m asking this because recent reports from tech publication CRN suggests that the company is about to lay-off over 14,000 employees, amounting to nearly 20 per cent of the global workforce. The company is expected to announce the cuts within coming weeks, say sources close to the development.
Ever since the arrival of a fresh outlook in the form of CEO Chuck Robbins in 2015, the company has been working to boost its enterprise software-based networking, security and management services. This move can be considered similar to Nadella’s vision of making Microsoft a prominent enterprise-focused cloud company in the coming years.
Stemming off the underlining transition from hardware to software, Cisco is planning heavy cuts in the range of 9,000 to over 14,000 employees worldwide. The company has already started offering early retirement package plans to its employees, reports one of the sources.
They need different skill sets for the software-defined future than they used to have. In theory the addressable market could be higher and margins richer, but it will take some time to make this transition.
said one anonymous source familiar with the situation.
According to a regulatory filing from April, Cisco currently has more than 73,000 employees operating worldwide. And if the company plans to go forward with the reported transition, then this would be the single largest workforce lay-off in its 32 year old history. Prior to this report, the company has announced major lay-offs in 2014, when it has booted more than 6,000 employees.
But, if you look at recent acquisitions undertaken by the tech giant, then you’ll notice that it is pushing hard to boost its cloud-based security services. To strengthen its security capabilities, it has acquired CloudLock Inc., a privately held cloud security company based in Massachusett and OpenDNS in a deal worth $293 million and $635 million respectively.
Cisco is also set to announce its fourth fiscal quarter result after the market closing tomorrow evening. In the previous quarter, the projected sales increased as much as 3 percent as compared with analysts’ projections for a revenue decline. Other newer entities including security, video and collaboration all posted an increase in sales upwards of 10 per cent.