Cisco to lay off 4,000 humans in hopes that customers 'adopt AI' in their businesses

Information technology and software maker Cisco announced its plan to cut about 4,250 employees in favor of a focus on artificial intelligence.

The layoffs account for about 5% of the company's global employment of approximately 85,000 workers and will cost $800 million in pretax charges to pay severance and benefits for the outgoing employees.

CEO Chuck Robbins told investors the company continues to align investments with future growth opportunities, while its 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."

Robbins made the remarks despite fewer than one in five of the companies surveyed by Cisco saying they were ready to integrate AI.

Statements were provided during a second-quarter earnings report that revealed the company's $12.8 billion in revenue was 6% less than the previous year.

However, Cisco still has $800 million in operating cash flow and has returned $2.8 billion to shareholders. As noted by the New York Post, the company also cut its annual revenue expectations by around $3 billion, expecting somewhere between $51.5 and $52.5 billion.

About a week prior to the report, Cisco announced a partnership with chip maker Nvidia to offer "simplified cloud-based and on-prem AI infrastructure" to its customers. This would help support "advanced AI workloads," Robbins explained.

Cisco hopes to push its customer base into relying more on artificial intelligence, even producing a "Cisco AI Readiness Index," a survey on over 8,000 private and business sector IT leaders.

The survey revealed that 84% of the companies thought AI would have at least a "significant impact" on their business in the future. However, just 14% said they are fully ready to integrate AI into their businesses.

That figure was followed by Cisco's command prompt that "businesses need to be AI-ready."

According to the same survey, the top fields currently employing AI services are IT infrastructure companies (84%) and cybersecurity companies (83%).

Cisco has estimated that generative artificial intelligence — AI that generates content in response to a prompt — could add up to $4.4 trillion to global GDP each year.

Presumably, that comes at the cost of disconnecting from human employees, as Cisco appeared to be revealing as its strategy.

In 2023, Cisco threw its hat in the ring to help GenAI personalize a student's learning experience. Cisco said it would provide input to TeachAI, a new AI resource for educators, formed by the World Economic Forum.

Teach AI's first listed "value" stated that it focused on centering "student and educator needs, with a focus on equity."

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