Cisco has announced as many as 10,000 job cuts are necessary to achieve its new strategic direction to save US$1 billion in the fiscal year of 2012.
After fierce compitition with competitors like Hewlett Packard, Cisco is cutting 14 per cent of its workforce, with 7,000 jobs to be cut by the end of August. An additional 3,000 jobs will be eliminated by early retirment packages according to a bloomberg report.
At the Cisco Live customer and partner event being held in Las Vegas, Principal Analyst Jens Butler said “these cuts are a component of the recently announced US$1 billion in savings being targeted during fiscal 2012 and tie in very closely to Cisco’s new strategic direction of streamlining to drive the philosophy of being easier to do business with and execute faster.”
Cisco CEO John Chambers addressed in his key note that the restructuring will enable the organisation to maintain its leading market position, while giving it the best opportunity for progress in the coming future.
The restructuring will focus on the company’s five key priority areas, including:
1. Routing, switching and services.
3. Data centre virtualisation and cloud
5. Architecture for business
Cisco believes the job cuts will help with the restructuring of the company, aiding in the integration of various technology and services groups, ultimately simplifying modes of engagement for customers and partners.
They also believe the cuts are a dynamic response to market change, saying in its press release:
“With this greater emphasis on its core competencies and cleaner engagement model with the multiple layers of its partner ecosystem, it is clear that Cisco is listening to and shifting with market dynamics rather than attempting to force the market on its own.”
Cisco have yet to officially comment on the number of jobs to be cut.