Cisco to ax about 310 workers at headquarters, continues software, services shift

Cisco sign (flikr)
Cisco has continued to see revenue struggles over the past several quarters.

As Cisco proceeds with its transition towards a company that is focused on software and services, the company is again streamlining its employee base with plans to cut about 310 workers from its San Jose, California, headquarters.

According to data compiled by Bloomberg, the vendor currently has 73,000 employees on its roster.

“Cisco regularly evaluates its business and will always make the changes necessary to effectively manage our portfolio and drive the most value for our customers and shareholders,” the company said in a statement to Bloomberg. “As a result, this can mean realigning some areas so that we can invest in others such as security, data center/cloud and networking.”

RELATED: Cisco continues software transition, but slow service provider spending, switching impacts Q4 results

Cisco, which remains the top router and switching vendor, is working to make this shift to software due to demand from large service provider customers such as AT&T, CenturyLink and Verizon. Each of these service providers are in various stages of migrating towards a software-based network construct.

This is the second time Cisco has announced employee layoffs. During its fiscal third quarter call, Cisco said it would lay off 1,100 from its workforce. Those job cuts, which are part of a broader restructuring plan, come on top of the 5,500 layoffs Cisco announced in August 2016. However, the vendor did not say if these latest layoffs at its headquarters are related.

The vendor has continued to see revenue struggles over the past several quarters, including the fourth quarter where revenue was $12.1 billion, down 4%, with product revenue down 5% and service revenue up 1%.

In the fourth quarter, Cisco generated 31% of its total revenue from recurring offers, an increase of almost four points from a year ago. Revenue from subscriptions increased 18% and now represents over 50% of the vendor’s software revenue. However, total product orders for the fourth quarter were flat.

Cisco is hoping that its new line of Catalyst 9000 switches and the intent-based networking concept—one that it is currently vetting with its largest enterprise customers—could boost switching revenues.

But Cisco is hardly alone in being forced to make job cuts. A separate Bloomberg report emerged that Hewlett Packard Enterprise (HPE) plans to ax about 10% of its employee base, or at least 5,000 workers, citing people familiar with the matter. HPE’s job cuts are part of a broader effort to reduce expenses.