Company transitioning from hardware to software-centric business.
American multinational corporation Cisco Systems is laying off about 14,000 employees, representing 20 percent of its workforce, reported technology news website CRN.
Sources close to the development told CRN that the job cut would be as part of the company’s transition from a hardware-oriented company to a software-centric business. The company is expected to announce the layoffs within a few weeks.
“They need different skill sets for the software-defined future than they used to have,” a source was quoted as saying by CRN. “In theory, the addressable market could be higher and margins richer, but it will take some time to make this transition,” the source added.
The San Jose, California-based company that has more than 70000 employees as of 30, April, has already offered early retirement package to many employees.
Reduced spending by telecom companies worldwide on network switches and routers had compelled Cisco to rethink. Understanding the situation, the company has been investing in new areas like data analytics software and cloud-based tools for data centers.
The expected lay-offs would be the single largest one in the 32-year history of the company. In the previous largest cut, Cisco laid off 6,500 employees in 2011. 1n 2012, it cut 1,300 employees and in 2013, the company laid off 4000 workers. Though the company laid off 6000 jobs in 2014, it did not cut any jobs last year.
Software giant Microsoft and HP have also announced layoffs this year. Microsoft announced in July that it would cut 2,850 jobs in 12 months and HP said that it would lay off 3000 workers by the end of 2016 fiscal.