Cisco has unveiled plans to reduce its workforce by approximately 5%, equating to around 4,250 employees worldwide.

This strategic move comes as Cisco intensifies its emphasis on artificial intelligence initiatives.

The layoffs, projected to incur pre-tax charges totaling $800 million related to severance and benefits, signify Cisco’s commitment to directing resources towards high-growth sectors such as AI and software development.

During an investor briefing on Wednesday, Cisco CEO Chuck Robbins articulated the rationale behind the decision, stating, “Our innovation sits at the center of an increasingly connected ecosystem and will play a critical role as our customers adopt AI and secure their organizations.”

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Job cuts

The announcement of the job cuts coincided with Cisco’s quarterly earnings report, where the company also revised its annual revenue forecast downward from a potential $55 billion to a range between $51.5 billion and $52.5 billion.

Robbins acknowledged the challenges in certain market segments, stating, “We also continue to see weak demand with our telco and cable service provider customers.”

As part of its AI-focused strategy, Cisco recently expanded its collaboration with semiconductor giant Nvidia, aiming to provide enterprises with simplified cloud-based and on-premises AI infrastructure.

This partnership encompasses networking hardware and software tailored to support advanced AI workloads.

Own tech

Furthermore, Robbins highlighted Nvidia’s commitment to utilising Cisco’s ethernet alongside its own technology, particularly prevalent in data centers and AI applications.

In the second quarter of fiscal year 2024, Cisco reported an adjusted profit of 87 cents per share and revenue of $12.79 billion, surpassing estimates from the London Stock Exchange Group.