A pending wave of layoffs at Cisco points toward a new trend of workforce “rebalancing” as big tech firms look to contend with rapidly changing skills requirements, analysts have told ITPro.
Reports from Reuters last week revealed that thousands of roles will be cut as part of a workforce restructuring effort as Cisco looks to focus on “high growth” areas of the business.
What these high-growth areas might be remain unclear, though more details will likely be available soon as the company prepares for an earnings call in mid-February.
Workforce restructuring at big tech companies have become increasingly common in recent months, and since the beginning of 2024 thousands of jobs across the global tech sector have been cut as firms look to continue reducing headcounts.
While speculation over the underlying reasons for these cuts has been rampant, and often focused on the automation of roles, what is clear is that the latest wave of cuts show the dreaded ‘year of efficiency’ in 2023 will continue well into 2024.
Messaging from leading industry stakeholders does provide a glimpse into the reasoning here, however. In early January, Google chief executive Sundar Pichai told employees to expect more job cuts as the firm looks to shed staff, deliver revenue boosts, and “drive velocity” in key business areas.
Others have cited pandemic-era over hiring as the reasoning behind cuts, with firms still looking to shed staff brought on during more prosperous economic conditions.
Bola Rotibi, chief of enterprise at CCS Insight told ITPro the reasoning behind these large-scale, forward-looking restructurings might have a lot to do with the changing nature of tech industry requirements.
“Let’s face it, Silicon Valley has been laying people off left, right, and center,” she said.
“To a certain extent, a lot of them are laying off in areas that are not growth areas. They are looking at the growth areas of AI, cloud, infrastructure,” Rotibi added. “I think it’s a readjustment”
It’s important to remember that while jobs are frequently being cut, new roles and opportunities are constantly emerging.
In October 2023, for example, Apple went on a hiring spree in the UK in an effort to improve its in-house AI talent.
Salesforce, which cut thousands of jobs in January 2023, announced it planned to begin rehiring for tech roles in September. In January, it was reported that this change in tactic had been paused.
SAP’s recent layoffs also point toward a growing trend of workforce regurgitation, with a particular focus on reskilling staff in areas such as AI and software development with the goal of moving them into other parts of the business.
The German software giant revealed that although it plans to cut thousands of roles in 2024, a significant portion of affected staff will be retrained and redistributed around the business in key areas.
Rotibi noted that this could become a means for tech firms to shed staff while still ensuring they retain talent in high-growth business segments.
“I think, to a certain extent, we’re seeing [some sort of re-balancing] in terms of the types of roles that companies need,” Rotibi added.
“There may also be some ideas of retraining as well, because that’s another thing that has to happen,” she said.
“Some people may be let off in one area but, six months down the road, may be picked up in another area.”
Cisco is no stranger to job cuts, as a round of substantial layoffs in 2022 would suggest, though this recent announcement does come as a bit of a shock following the marked optimism on display at Cisco Live in Amsterdam last week.
The company made several announcements over the course of the event, such as the enhanced visibility of its ThousandEyes platform and its AI-focused partnership with Nvidia. At no point did it hint at impending job cuts.