Cisco’s recent move to cut thousands of jobs continues what has been a broad slashing of employees across the cloud and telecommunications ecosystem in 2024 and could be set to continue through the end of the year.

Cisco’s move was part of a broader corporate restructuring initiative that will see the networking giant shift its operational focus from basic networking to work in artificial intelligence (AI), cloud, and cybersecurity. That move will see Cisco cut approximately 7% of its workforce, with CFO Scott Herren stating the vendor will take a $1 billion charge tied to the cuts.

Herren attempted to add color to the job cuts by stating that the “reduction” is “much more of a reallocation versus a headcount savings.”

“In some cases, the efficiencies that we’re going to get will be from by moving into lower cost locations,” Herren said.

Cisco’s latest move came just a few months after it announced plans to slash 5% of its workforce following its mid-year fiscal results, which resulted in an $800 million pretax charge. Combined, the fiscal 2024 job cuts will reduce Cisco’s headcount from approximately 85,000 employees it had at the beginning of the fiscal year, down to around 76,000 employees.

Analysts noted that while the job cuts are tough, the move does show that Cisco is just following the money.

“Overall, we find that Cisco’s portfolio consolidations focused on bolstering its AI, security, and cloud capabilities pave the way for Cisco to better capitalize on the AI megatrend and the prioritization on organization-wide security implementations, including full integration of hybrid and multicloud defense,” The Futurum Group noted in a report. “The portfolio realignment and organizational restructuring underpin Cisco’s return to growth path in 2025 across the burgeoning AI era.”

Cisco CEO Chuck Robbins bolstered that point by stating Cisco was “shifting hundreds of millions of dollars into AI, into AI networking for cloud, into AI infrastructure, silicon, and cyber. It’s a meaningful shift, but we feel like the market’s moving so quickly, we have to do it.”

Intel, Microsoft, Google, Ericsson, and Nokia slash away

Cisco’s move came less than a month after chip giant Intel announced plans to cut 15,000 jobs, or around 15% of its workforce. The flailing chip maker said the cuts were tied to a broader goal of $10 billion in cost savings for 2025.

“Simply put, we must align our cost structure with our new operating model and fundamentally change the way we operate,” Intel CEO Pat Gelsinger wrote. “Our revenues have not grown as expected – and we’ve yet to fully benefit from powerful trends, like AI. Our costs are too high, our margins are too low. We need bolder actions to address both – particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected.”

The moves also continue what has been a rough 2024 for cloud and telecom employees.

Microsoft and Google earlier this year reportedly slashed hundreds of jobs at their respective cloud business units. This included Microsoft cutting up to 1,500 jobs at its telecom-focused Azure for Operators business and hundreds more from its Mission Engineering operations, and Google cutting jobs from its sales, consulting, go-to-market strategy, operations, and engineering teams.

These followed telecom equipment provider Ericsson cutting 1,200 jobs due to a “challenging mobile networks market in 2024,” and its rival Nokia cutting 14,000 jobs late last year.

Telecom, cloud lead job cuts

The Computing Technology Industry Association (CompTIA) noted the technology sector slashed more than 9,000 jobs in July, “mirroring national labor market data that revealed a slowdown in job growth.” The group found that while tech services and the software development sector managed to add 4,000 positions, this was “offset with losses in telecommunications, cloud infrastructure, and related sub-sectors.”

CompTIA did note that the unemployment rate for tech occupations did drop slightly to 3.2% in July, which compared favorably to a slight increase in the national unemployment rate that climbed to 4.3% for the month.

“Although disappointing, the slowdown in hiring is about in line with expectations,” Tim Herbert, chief research officer at CompTIA, noted in the report. “Employers continue to weigh a range of factors in shorter-term tech hiring while eyeing longer-term growth strategies.”

Despite the cuts, the CompTIA report found that there were more than 471,000 active tech-related job postings at the end of July, with more than 176,000 of those postings added just that month. Those postings showed a strong demand for software developers and engineers, IT project managers, data analysts and scientists, and tech support specialists.