Cisco to lay off 5,500 staff as it 'pivots' towards software-defined networking

Profits up 20 per cent; jobs down seven per cent

Cisco has announced that it is cutting 5,500 jobs, or about seven per cent of its workforce - in a restructuring that is intended to shift the company's focus from hardware to software. Some 300 jobs will go in the UK and Ireland.

The company announced the redundancies after unveiling full-year revenue of $49.2bn and net income up 20 per cent to $10.7bn.

Cisco CEO Chuck Robbins justified the job losses, claiming that the company needs to 'pivot' to follow the vogue for software-defined networking, which requires staff with more skills in this area and fewer in developing networking hardware.

"We are looking at the areas where we believe growth will come faster," said Robbins in the earnings conference call. He continued: "It's not that we're ignoring one in favour of another, we just want to make sure our investments are commensurate with the growth opportunity."

Analysts have suggested that the shift towards cloud computing is also changing the networking equipment market as cloud providers require ultra-high-end network devices to handle the vast volumes of data with the performance that customers need, while demand from corporates for data centre networking products is levelling off.

However, summer job losses appear to have become an almost annual tradition at Cisco, notwithstanding the hiatus last year shortly after Robbins was appointed CEO.

Cisco announced cuts in 2009, 2011, 2012, 2013, 2014 and, now, 2016. The company has formally laid off 29,000 staff since 2009, which would have halved the headcount. Instead headcount has stayed in the same ballpark of 70,000 to 75,000 permanent staff.

As a result, Cisco is acquiring the reputation of a company with a permanently revolving door. One review of the company on the Glassdoor website lists "Good outplacement services" as a benefit of working at Cisco.

TheLayoff.com blog, meanwhile, contained plenty of grumbles from disgruntled staff. "Yet again the older and higher grades are getting hit, replaced with cheaper resources. ‘Newer skills' is [a] cover for offloading the long-term people that have given years of quality service," said one.

Another suggested that the relatively modest level of lay-offs is just PR and that the real number that will be shown the door is likely to be much higher.