Tech firm Cisco AXES 5,000 JOBS to make way for bigger AI investment

08/25/2024 / By Ava Grace

A California-based tech firm has announced layoffs set to affect about seven percent of its total workforce.

San Jose-based Cisco Systems announced the layoffs in an Aug. 14 filing with the Securities and Exchange Commission. According to SFGATE, this was the second time that the company slashed its workforce this year. Cisco axed 4,000 jobs in February, and this new round of layoffs translates to at least 5,500 workers receiving the pink slip.

In an email to SFGATE, Cisco spokeswoman Robyn Blum said the second round of layoffs is meant to allow the company to invest in “key growth opportunities and drive more efficiency in our business.” This, despite the firm reporting $10.3 billion in profits last year.

“Cisco is laser focused on growth, consistent execution and resetting our cost structure as we invest in AI, cloud [computing] and cybersecurity,” she continued. While Blum assured that the company would provide “full support” to affected employees, she did not offer specifics about the plan for workers’ severance pay. (Related: Tech firms laid off 124,000 employees worldwide in first 7 months of 2024.)

To make things worse, a blog post from Cisco CEO Chuck Robbins offered more hints about the layoffs. He used the term artificial intelligence (AI) five times in the said post, highlighting the company’s efforts to keep up in the ongoing AI race.

According to Robbins, Cisco plans to consolidate its networking, security and collaboration teams into one organization. He added that the company is still integrating San Francisco-based data security and management company Splunk. Cisco closed its $28 billion acquisition of the latter in March.

“Cutting costs through layoffs and then plowing cash into expensive technologies like AI is a trend that’s emerged at some tech companies over the past two years,” SFGATE mentioned.

Cisco the latest company to slash human jobs in favor of AI

Cisco is not the first, and definitely not the last, to slash jobs in favor of AI. It joins other tech companies like Microsoft and Intuit (of TurboTax fame) that have ditched human staffers for automation. Other companies have followed suit, according to HR Grapevine.

Executives at Dell informed staff in a memo that the company would be laying off 12,500 jobs. The memo also emphasized a major change to its sales unit, creating an “AI select sales team” as the company capitalizes on the fast-moving “world of AI.”

Intel CEO Pat Gelsinger also announced 15,000 layoffs in a memo, acknowledging the “painful news” for both employees and upper management. “Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI,” he wrote.

Research done by EY at the end of 2023 showed the seriousness of workers’ concerns about job security, amid companies’ adoption of AI. It found that 75 percent of employees were concerned about AI rendering certain jobs obsolete, while 65 percent said they were anxious about AI replacing their jobs.

A recent report from Resume Builder seemingly bolstered these concerns. It found that 37 percent of business leaders who used AI last year said it replaced workers. According to HR Grapevine, workers’ worries are justified as AI gives companies the chance to complete time-consuming processes using automation for a fraction of the cost.

Plenty of human resources leaders aware of AI’s implications have tried to reassure workers that AI will only offer a supporting role and not replace them. They have also claimed that a bot won’t take their job and would only remove administrative tasks from workers, opening them for more valuable tasks. But the layoffs by Cisco and other companies seem to contradict this.

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