As Cisco Systems reportedly is under consideration to replace one of the old-school firms in the Dow Jones Industrial Average, there comes an old-school piece of journalism from Network World that tells how the networking giant allegedly has been downsizing and outsourcing jobs on an incremental basis under the radar of federal reporting regulations. Via so-called "limited restructuring," the story says Cisco gradually has outsourced more than 120 jobs at three facilities over the last year or so, but Cisco disputes that number. The positions were outsourced to India's Tech Mahindra. Network World's sources say the job cuts are not included in the planned elimination up to 2,000 jobs that Cisco announced last month.
Incremental, unannounced reductions may have allowed the company to avoid public lay-off announcements required by the U.S. Department of Labor's Worker Adjustment and Retraining Notification Act (WARN). That act requires large companies to give 60-day advance notice of plant closings and mass layoffs, but as the story notes, there are exemptions to the rule.
If Cisco did carry out these smaller cuts in an effort to avoid WARN obligations, it likely would not be the first time a large U.S. company has done that, and at this time in this economy, the American workforce might have more to worry about more than Cisco reporting every last outsourced job. For that reason, some might ask: What's the big deal? According to the Network World story, it sounds like Cisco is fairly generous with severance and allowing affected employees the opportunity to find jobs elsewhere in the company.
However, Cisco CEO John Chambers has been proud enough of his company's ability to avoid large lay-off events that he has mentioned it repeatedly as evidence of the company's strength. The revelation also comes at a time when some U.S. companies, like AT&T, have actually brought previously outsourced jobs back to the U.S. It will be interesting to see if Chambers' claims come up again.
- Network World has this story
Cisco recently announced 250 job cut, with more to come
Cisco said late last year it would cut $1 billion in costs