Cisco Systems plans to cut up to 5,500 jobs (7 per cent of its global workforce) in order to reduce costs and transition from a hardware-centric business to a software-centric business. The company intends to use the money saved to invest in areas such as the IoT, security, collaboration, next-generation data centres and the cloud.
The bid to restructure comes after the company’s quarterly revenue fell 2 per cent to $12.6 billion, while net income rose 21 per cent to $2.8 billion. The company also saw a 33 per cent growth in revenue from software and subscriptions, with declining interest in the “more established” areas of its business.
“Today, we announced a restructuring enabling us to optimise our cost base in lower growth areas of our portfolio and further invest in key priority areas such as security, IoT, collaboration, next generation data centres and the cloud,” said the company’s CEO, Chuck Robbins.
“We expect to reinvest substantially all of the cost savings from these actions back into these businesses and will continue to aggressively invest to focus on our areas of future growth.”
Cisco is the second big technology company to announce significant job cuts this year, following Intel’s decision to cut 12,000 jobs, which was announced in April.
Cisco’s job cuts will commence in the first quarter of fiscal 2017.