Networking major Cisco announced that it would reduce seven per cent of its global workforce that translates to 5,500 job cuts, as the company transitions from a hardware-centric player to a software services and solutions focus in a changing market that is moving towards software defined networking.

Chuck Robbins, who took over as CEO nearly 13 months ago, announced the job cuts during the company’s fourth quarter earnings call on Wednesday.

India being home to the $48.7-billion company’s second largest workforce with a total of 10,500 employees of which 7,500 are R&D engineers is bound to be impacted by the job cuts that will start from the next quarter beginning October 1.

While layoffs are inevitable across geographies, sources revealed that impact on India would be under 5 per cent of the total number of layoffs, as India is a profitable cost centre that has posted consistent growth in sales revenue over the last nine quarters.

In fiscal year 2016, Cisco India registered 40 per cent revenue growth in Q1, 23 per cent in Q2, 18 per cent in Q3 and 20 per cent in Q4.

A Cisco insider said: “The India layoffs will span sales, engineering, non-performers and redundant skill-sets. While the sales organisation will see minimal impact as they continue to perform well, the engineering side will see heads roll, as the focus will move to hiring fresh skill-sets that will steer the company towards more profitable business like cloud computing and software services.”

A slew of exits



A former top executive from Cisco said: “Cisco’s software defined networking pilots initiated a few years ago have failed as a result of lack of continuity in technology leadership, with several exits, including Padmasree Warrior, Pankaj Patel and more recently Cisco’s ace technology innovators Luca Cafiero, Soni Jiandani, Mario Mazzola and Prem Jain. Since India engineering is key to Cisco, fresh hiring of talent will necessitate letting go of redundant skill-sets within.”

Cisco’s global move to merge Product and Services Sales in FY2015 starting with its Service Provider business, which was rolled out to Enterprise and Government businesses in the same fiscal, brought with it a fresh set of challenges to the India sales organisation that saw nearly 30 exits over the last 12 months with many more expected over the next few quarters.

“Lack of clarity in roles, sales goals, compensation on sales; overlapping responsibilities and conflicting interests are all creating challenges with continuity,” revealed a source familiar with the goings on.

On being queried about layoffs in India, Dinesh Malkani, President, Cisco Systems, India and SAARC, told Business Line: “The layoffs will be a part of the restructuring that the entire company is going through as we continue to re-invest in high growth areas such as Security, IoT, Cloud, Mobility and Data Centre.

“The market opportunity in India is growing and looks very good as our customers look to partner with us on their digitisation journey.

“The India growth rate in the fourth quarter was led by increased spending of States in Smart Cities, banking and education sector spend on digitisation and a healthy Service Provider business that did very well.”

He, however, declined to comment on the number of layoffs, saying that the company does not call out location-specific numbers separately.