***Update: During its earnings call later today, Cisco said it was actually laying off 5,500 workers, or about 7 percent of its workforce.
Cisco is planning to lay off about 20 percent of its workforce worldwide, or from 9,000 to 14,000 employees, according to CRN, which broke the news yesterday evening. This is the largest layoff in its history.
The news comes as many employees have already been offered early retirement packages.
It’s unclear whether Cisco simply has too many employees or whether it doesn’t have the right kind of talent for a software-centric future. The shift to software skills is evident even within the company’s certification programs. The company has recently changed the curriculum for its CCNA Routing and Switching certification, which designates a Cisco-certified network administrator. The new certification requirements reflect the radical changes within networks, which are becoming more programmable.
Cisco executives likely will give more specifics about the layoffs this afternoon when they report the company’s 2016 fourth fiscal quarter earnings.
Cisco has slashed its workforce before. In August 2014 it cut 6,000 jobs; in August 2013 it cut 4,000 employees; and in July 2012 it cut 1,300 jobs. Last summer, the company did not have any mass layoffs. That was during the time when longtime CEO John Chambers retired and turned over the reins to Chuck Robbins.
In a research note penned by analyst Mitch Steves with RBC Capital, Steves says that given Cisco’s shifts to software and security, a reduction in workforce makes sense. “While a 20 percent reduction would be severe, we think a number closer to about 10,000 would be fair,” writes Steves.