There are reports this morning that Cisco Systems, the world’s largest networking equipment firm, is looking to layoff thousands of workers.
Despite remaining a wildly profitable enterprise, Cisco is making the moves in response to the market’s shift towards software-based products and security services.
The cuts are reportedly going to impact anywhere from 9,000 to 14,000 employees at the networking giant, a workforce reduction of around 15%.
In recent years Cisco has been aggressively buying up companies and working to replace their declining legacy business of building networking hardware.
“We’re in the early days of this transition, but I think we’ve proven in those businesses that we can actually make this transition, and we now have a plan underway,” said Cisco CEO Chuck Robbins back in May.
According to trade publication CRN:
“They need different skill sets for the software-defined future than they used to have,” said one source familiar with the situation, who declined to be identified. “In theory the addressable market could be higher and margins richer, but it will take some time to make this transition.”
The company’s headcount as of April 20, 2016, was 73,104, according to a filing with the U.S. Securities and Exchange Commission. Cutting 14,000 employees would be the single largest layoff in Cisco’s 32-year history.
The last time Cisco did a major lay-off was back in 2014, when they shed about 6,000 positions. The global transition to software-centric services and cloud computing has only intensified since then.