Cisco reported record revenue of $15.8 billion for the past quarter. At the same time, it plans to increase investment in chips, optics, security, and the use of AI by its own staff. However, the workforce will shrink by 5 percent.
Cisco CEO Chuck Robbins shared this news with his staff in a message that the company posted online later on Wednesday. He explains that companies aiming to succeed in AI can only do so by making disciplined investments in areas where demand and “long-term value creation” are strongest. This means that nearly 4,000 jobs will be eliminated. Robbins does not explicitly mention layoffs, so this may partly involve contracts that will not be renewed.
Given that Cisco has made 215 acquisitions according to some counts and signed multiple letters of intent for even more, reductions are actually always to be expected at the company. After all, that number points to an average of five acquisitions per year, which will constantly result in duplicate roles.
Layoffs for AI, not by AI
It is important to note that jobs are not being replaced directly by AI, nor are investments in AI the direct cause of the workforce reduction. We often view the first explanation with skepticism, particularly because even AI chipmaker Nvidia concluded that AI can currently be more expensive than an employee performing the same tasks as an intended AI agent. But in the latter case, Cisco is opting to shift its investments toward multiple areas that are sometimes directly or indirectly related to AI, but do not simply fall under that umbrella.
Cisco does, however, see opportunities to have existing employees at client organizations perform their work differently. Consider the shift toward AgenticOps, where networks and their management operate at a speed that only AI can keep up with. This means that administrators are assigned a fundamentally different role, one more focused on the intent behind the systems than on their precise execution. It is quite possible that this paradigm shift will also lead to a revaluation of human work within Cisco itself. But for now, it does not appear that jobs will be lost as a result.
Key difference
In a phase where AI spending is growing, it makes sense that hardware vendors will initially reap the benefits. This applies to Cisco, chip companies, hyperscalers, and other parties that have a direct influence on the fundamental architecture and performance of AI infrastructure. Over time, we can anticipate that the benefits will shift and, ideally, broaden significantly. For now, that is still too far in the future. However, it is relevant that layoffs and workforce reductions in general cannot simply be attributed to AI. It is not even certain that a mature form of agentic AI or an AI application using newer terminology will lead to those reductions.