Cisco has announced a decision to cut the jobs of 4,250 from its global workforce. This represents about 5% of all its employees. The reduction in the size of the company is likely a knock on effect from increasing interest rates which make it more expensive to borrow money and incentivize people to save.
With fewer people and businesses spending money, companies like Cisco can no longer justify the previous level of spending so one of the most effective ways to cut costs is to cut jobs.
According to CNBC, Cisco had a strong second quarter but the company is not so optimistic about the future. Commenting, CEO Chuck Robbins said:
“In terms of the macro environment, we are seeing a greater degree of caution and scrutiny of deals given the high level of uncertainty. As we’re hearing this from our customers, it’s leading us to be more cautious with our forecast and expectations. Second, as we discussed last quarter and subsequently saw in other technology provider results, customers have been taking time since the start of our fiscal 2024 to deploy the elevated levels of products shipped to them in recent quarters, and this is taking longer than our initial expectations.”
Just since the start of this year, cuts at tech firms have affected nearly 35,000 workers. Since the cuts began in 2022, the total number of layoffs globally, as reported by layoffs.fyi, has surpassed a staggering 462,000 job cuts.
At the end of 2022, Neowin reported that 79% of tech workers who were laid off had managed to find a new job within three months of beginning their search. Of those rehired, 74% got new roles in tech. Given the number of layoffs since then, finding a new job may not be as easy as back then.
Going forward, the willingness of tech firms to hire new people will largely be dependent on the arrest of inflation. Once inflation is under control, people and businesses will also be able to spend more. If interest rates are lowered again in the future then people will also be more likely to stop saving as much and get spending again, giving companies the chance to create new jobs.
Source: CNBC