Cisco Systems, Inc. (NASDAQ:CSCO) is planning to lay off employees in its second round of job cuts this year, as the networking equipment company shifts its focus toward high-growth areas like cybersecurity and artificial intelligence (AI). The upcoming layoffs could be similar in size to the 4,000 positions cut in February. An official announcement is anticipated as early as Wednesday, coinciding with the company’s fourth-quarter financial results.

Impact on Workforce and Strategic Adjustments

As of July 2023, Cisco employed approximately 84,900 individuals, excluding those impacted by the February layoffs. The San Jose, California-based company has encountered challenges including weak demand and supply chain issues within its core internet traffic management equipment business. Cisco has been diversifying its operations to mitigate these issues, notably through its $28 billion acquisition of cybersecurity firm Splunk, completed in March. This strategic move aims to reduce dependence on one-time equipment sales by increasing its subscription-based revenue stream.

Furthermore, Cisco has been expanding its AI capabilities, aiming to secure $1 billion in AI product orders by 2025. The company recently launched a $1 billion fund to invest in AI startups such as Cohere, Mistral AI, and Scale AI, and has made 20 AI-related acquisitions and investments in recent years.

Broader Industry Trends

The latest round of Cisco layoffs reflects broader trends in the tech industry, where numerous companies are implementing cost-cutting measures to balance substantial investments in AI. According to Layoffs.fyi, over 126,000 employees across 393 tech firms have been laid off since the beginning of the year. Notably, Intel Corporation (NASDAQ:INTC) also reduced its workforce by more than 15%, amounting to approximately 17,500 positions, to address challenges within its manufacturing sector.