Cisco is going to lay off 14,000 employees, or nearly 20 percent of its workforce, a move that sources say is related to the vendor’s transition from hardware to software-centric products.
Citing several sources close to the company, a CRN report said that the layoffs could happen in the coming weeks. The vendor has also offered early retirement packages to employees that will be affected by this latest round of cuts.
What’s driving Cisco’s move is its service provider customers' ongoing movement to a software-centric service model, one that’s underpinned by SDN and NFV. AT&T, for example, plans to transform 75 percent of its network to software by 2020.
Having already transformed 5 percent of its network to software thus far, AT&T said it’s on track to reach 30 percent by the end of this year.
"They need different skill sets for the software-defined future than they used to have," said one source to CRN who asked not to be named. "In theory the addressable market could be higher and margins richer, but it will take some time to make this transition."
Besides the layoffs, Cisco has been enhancing its portfolio with software centric elements by purchasing various companies like Tail f. The vendor was also named as one of Verizon’s preferred SD-WAN suppliers earlier this year.
News of the layoffs comes as the vendor gets ready to report its fiscal second quarter earnings results after the market closes on Wednesday.
Conducting large layoffs is really nothing new for Cisco, a trend that’s risen over the past five years. The company slashed 6,000 employees from its rolls in August 2014 after laying off 4,000 in August 2013. However, the largest job cut effort came in 2011 when it axed 6,500 employees, or 9 percent of its workforce. Cisco did not make any job cuts in 2015 after Chuck Robbins took over as the company’s CEO.
- CRN has this article