Cisco Systems announced on Monday that it will axe 11 500 jobs in what could be the biggest layoff ever for the company.
Cisco had over 73 000 employees at the end of the last quarter, Reuters reports. The company says that this drastic reduction of 15 percent of its workforce is part of a move to streamline operations and cut annual expenses by US $1 billion.
About 6500 employees across the globe will directly lose their jobs, including about 15 percent of all executives at the level of vice president and higher. Another 5000 workers will be shed through the sale of a set-top box manufacturing facility in Juarez, Mexico to China-based Foxconn Technology Group.
Foxconn is a subsidiary of Taiwan-based Hon Hai Precision Industry, the world’s biggest contract manufacturer of electronic components. It is known for making Apple’s iPhones and iPads as well as products for Hewlett-Packard, Sony and Dell. It employs over 1 million people in China and has been embroiled in controversies over how it treats its employees, spurred by a string of suicides last year. Cisco, meanwhile, is an annual fixture on Fortune Magazine’s list of the 100 best companies to work for in the United States.
It’s unclear how many engineering jobs will be affected. However, Cisco spokeswoman Karen Tillman says, “the workforce reductions will hit all areas and functions within the company…which would obviously include our engineering organization.”
In early April, Cisco CEO John Chambers admitted that the company had lost its way and needed to refocus on its core businesses such as routing, switching and data centers. The company’s recent forays into consumer products have caused it to lose its edge in its core networking business. It has since shut down its Flip digital video camera business and Eos social publishing platform.
Cisco said its restructuring costs will be up to $1.3 billion over the course of 2011 and 2012, consisting mainly of severance pay and one-time termination benefits. The last big layoffs at the network equipment maker were in 2002, when it eliminated 2000 positions.
Prachi Patel is a freelance journalist based in Pittsburgh. She writes about energy, biotechnology, materials science, nanotechnology, and computing.