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Cisco is laying off hundreds of employees as part of a restructuring to increase the speed of its transition to becoming more of a software and services company than a network hardware maker.
Cisco confirmed this week there have been layoffs, but did not provide the number or details on where in the company they took place. However, documents filed with the state of California said the company would give pink slips to 405 employees at its San Jose, Calif., headquarters and 57 workers at its Milpitas, Calif., offices, the Silicon Valley Business Journal reported. The Cisco layoffs started on Monday -- a week before the Cisco Partner Summit in Las Vegas.
Other media reported the majority of the layoffs were in the company's Customer Experience (CX) unit, which is led by recently hired Maria Martinez. Martinez, a former executive at Salesforce and Microsoft, is in charge of guiding customers through Cisco's transition to a business that generates the majority of its revenue from network and security software subscriptions. Martinez reports directly to Cisco CEO Chuck Robbins.
Cisco acknowledged there were layoffs planned, as the company continued to restructure its operations. The CX unit plays a significant role in that reorganization.
"Over the last several years, we have been transforming Cisco to deliver even greater value to our customers," the company statement said. "We continue to make decisions to ensure that our investments and resources are aligned with strategic growth areas of the business."
Analyst says Cisco layoffs expected
Glenn O'Donnell, an analyst at Forrester Research, said the number of layoffs was "nothing alarming," given that Cisco's global workforce is about 70,000.
"These waves come and go in the classic tech giants, as they continue to tweak staff in their pursuit to refine their business," O'Donnell said.
Cisco's "aggressive effort" to rebuild its CX organization will require staff changes, O'Donnell said.
"Cisco is doing fairly well, but [Robbins] still has a lot of work to do to turn Cisco into a different company," O'Donnell said. "He has a brutally tough job. Even after a few years at the helm, the job is far from done."
Cisco has shown progress in its transition. In August, the company reported revenue of $12.8 billion in the quarter ended July 28, a 6% increase from the same period a year ago. Application sales rose 10% and recurring revenue -- a reflection of sales in software subscriptions and services -- accounted for 32% of total revenue, a point higher than the same period last year.
Cisco said it would let some laid-off employees apply for newly created CX jobs "where there's a skills match." Also, Cisco has more than 3,800 job openings globally and could offer some laid-off workers positions in other areas.
Since 2016, Cisco has made roughly 7,000 job cuts.