Why is Cisco Systems reducing its global workforce?

Cisco Systems, renowned for its networking equipment, has announced a strategic move to streamline operations, opting to trim 5% of its global workforce. Cisco Layoffs decision is fueled by a commitment to prioritize burgeoning sectors like artificial intelligence and software, echoing the strategic realignments seen across the tech industry in recent times.

Furthermore, the company has revised its annual revenue projections to a range of $51.5 billion to $52.5 billion, marking a downward adjustment from its earlier forecast of $53.8 billion to $55 billion. This announcement, coupled with a third-quarter revenue outlook between $12.1 billion and $12.3 billion, has triggered a 5% dip in Cisco’s shares during extended trading, according to LSEG data.

When does Cisco anticipate many of the job cuts to occur?

Industry analysts anticipate ongoing pressure on demand for Cisco’s products, notably from clients in the telecom sector who are exercising caution in their expenditure, along with cloud companies prioritizing the clearance of excess inventory in networking gear.

Earlier reports had hinted at Cisco’s intentions to undergo significant restructuring, including substantial layoffs, in a bid to pivot towards high-growth sectors. This move aligns with the company’s acquisition of Splunk last year for approximately $28 billion, aimed at fortifying its software arm. Cisco has also set ambitious targets, aiming to secure $1 billion in AI-related orders by fiscal year 2025.

With an employee base of approximately 85,000 individuals, Cisco anticipates the majority of job cuts to materialize in the third quarter of fiscal 2024. These actions will incur an $800 million charge before taxes, covering severance and associated expenses. The company plans to recognize about $150 million of these charges in the fourth quarter of fiscal 2024, with the remainder primarily accounted for in the first half of fiscal 2025.

How can Whitten and Lublin help Cisco employees?

In Canada, Cisco employees not part of a union are entitled to receive their full severance pay in the event of job loss due to downsizing or corporate restructuring. Various factor can impact a severance package, potentially spanning up to 24 months of pay. In case of mass layoffs of 50 people or more in Ontario, employees may be entitled to a greater severance package. Those not receiving their complete severance amount have the right to pursue compensation. We advise seeking legal counsel to ensure individuals facing layoffs at Cisco receive their entitled compensation.

At Whitten & Lublin, we understand the challenges associated with job loss or termination, recognizing it as a stressful experience. Our team of experienced employment lawyers will guide you through the available legal avenues. This ensures you receive the rightful compensation owed to you. We encourage those affected by recent layoffs in Canada to reach out to us for a consultation, accessible through our online portal or by phone at (416) 640-2667 today.