Cisco Systems, which is one of the famous tech giants in the USA, announced that it is cutting 7% of its workforce (5,500 jobs) this summer. According to a report published earlier, the firm is planning to cut up to 14,000 jobs from its worldwide workspace.
According to Cisco, this move of slashing the jobs is to reinvest in high-growth areas such as cloud computing and security. For many companies, one of the easiest ways to cut costs is by cutting jobs, and it seems that Cisco has done just that.
However, the fact that the company is thinking of reinvesting in other areas is an indication that it will eventually hire more workforce in the coming months or years.
Currently, the US tech giant Cisco employs around 70,000 people and 5000 people in the UK alone. According to Cisco, the market requires both Cisco as well as its customers to drive innovation and be decisive.
That's why the company is planning to invest the money saved from the job cuts into other important areas such as the development of next-gen data centres, cloud computing, and the 'internet of things'!
The traditional business of Cisco is selling routers and network switches. However, Cisco is struggling due to the falling demand and rising competition from other suppliers.
The revenue in the 4th quarter dropped by 6%, and the revenue from the sale of switch units registered a 2% growth. Due to the falling demand, Cisco is focusing more on its firewall business that is used for computer protection.
Another strategy employed by Cisco is that it is acquiring other businesses. In fact, the company ended up buying a total of 10 companies in the last year alone. All of these companies are involved in the cloud services sector, which is the main focus of the company right now.
For the 4th quarter, the profit of Cisco was around 2.1bn ($2.8 bn), which is an increase of 21% when compared with the same period last year.