The American multinational corporation technology company is cutting about 5,500 jobs, which represents nearly 7 per cent of its global workforce.
Cisco, which globally employs around 73,000 people and is known as the world’s largest maker of networking gear, is moving away from its usual hardware manufacturing to become a software-centric business.
The cuts were announced on Wednesday in the company’s Fourth Quarter and Fiscal Year 2016 Earnings report.
Cisco reported a 21 per cent increase in net quarterly profits to $2.81bn, yet cautioned of a “challenging macro environment” as revenue fell to $12.64bn from $12.84bn in the quarter to 30 July.
The firm is reportedly making job cuts as large businesses are making changes in how they operate, transitioning IT from hardware to online cloud computing.
Cisco said in its Wednesday report: “Today’s market requires Cisco and our customers to be decisive, move with greater speed and drive more innovation than we’ve seen in our history.
“Today, we announced a restructuring enabling us to optimize our cost base in lower growth areas of our portfolio and further invest in key priority areas such as security, IoT [Internet of Things], collaboration, next generation data centre and cloud.”
The job losses will cost Cisco approximately $700m in termination payments and will begin in early 2017, according to the Guardian. The company did not report which jobs will be lost, but said that they would aggressively “reinvest substantially all of the cost savings” into its upcoming development areas.
This news means that Cisco is the second large tech company to report job cuts this year, after Intel announced the termination of 12,000 jobs in April.
Commonly known for its enterprise networking hardware, Cisco’s profit margin has slumped, pushing them to invest in the IoT sector – they have recently invested in ‘internet of everything’ start-ups in the UK.