Cisco Layoff Talk Builds As Longtime Execs Accept Early Retirement Offers

Cisco wouldn‘t confirm the number of employees that took advantage of the early retirement offers, but tells CRN that while roles might change, the support structure around Cisco’s channel strategy won’t be going anywhere.

Early retirement offers have been doled out and layoffs are being reported across geographies nearly two months after Cisco Systems announced a large-scale restructuring plan that would cut more than $1 billion in costs in the wake of financial fallout from the COVID-19 pandemic.

A spokesperson for Cisco wouldn‘t confirm numbers, but told CRN that despite the employee restructure, the support structure for the company’s all-important channel won’t be changing. Approximately 85 percent of Cisco’s revenue going through partners today, Cisco said.

“Over the coming weeks and months, Cisco will increase our investments in key business areas that will drive customer satisfaction and partner profitability going forward and reduce investments in others. We will be restructuring parts of our business as a result,“ a Cisco spokesperson said in a statement. ”Our employees are our priority and we are committed to providing our full support to those transitioning to new roles or teams within Cisco or leaving the company. Where possible, we will offer employees options that enable them to make decisions that best suit their career goals and personal circumstances.”

[Related: Cisco CEO Chuck Robbins: COVID-19 Forcing As-A-Service Transition]

The San Jose, Calif.-based tech giant in August announced a restructuring plan that included a voluntary early retirement program that will offer estimated pretax charges of approximately $900 million, consisting of severance and other one-time termination benefits, among other costs. The company said at the time that it expects to gain $800 million with these changes in place in the first quarter of Cisco‘s fiscal 2021, which ends in November. The remaining amount will be recognized during the rest of the fiscal year.

Cisco CEO Chuck Robbins said in August that the early retirement program will help align the company around emerging priority areas. “We‘re going to re-balance our R&D investments to focus on key areas that will position us well for the future,” Robbins said, calling out cloud security and cloud collaboration, as well as developing solutions for education and healthcare.

The early retirement program was voluntary, and only open to eligible employees, the Cisco spokesperson said. As of July 25, Cisco had 77,500 employees globally, according to a recent SEC filing.

Several longtime Cisco executives this week took to LinkedIn to share the news that they had taken the company up on its early retirement program. The executives -- some part of the company‘s partner organization -- shared that October 5 was their last day with Cisco, some of which were closing out a more than two-decade run the with company.

Executives who took the early retirement offer include Rachanee Sporl, partner operations manager for the last 22 years, Jim Parker, a Cisco employee for 23 years and distribution manager for 13 years, Matt Smorto, senior director of systems engineering, worldwide data center, cloud, and IoT after 28 years, Paul Teel, senior business development manager for more than 16 years, Matt Gansemer, regional sales director supporting Cisco‘s partner community, employed at the company for 16 years, and Tom Flaherty, who worked at Cisco for a collective 20 years, most recently as partner operations manager, Service Provider Technology Partners.

Longtime Cisco channel leader Steve Benvenuto, a 21-year Cisco vet who most recently served as senior director, global security, Partner Sales Organization for Cisco, also announced he had accepted an early retirement package from the tech giant, but would be looking for his next adventure after taking some time off.

The Cisco spokesperson said that at this point, all early retirement offers for eligible employees have been issued and employees have already responded.

However, if not enough employees took Cisco up on its voluntary retirement deal, they may be subject to the company‘s $1B cost reduction goal in the form of layoffs, said one Cisco partner that requested anonymity.

Chatter has begun to build on the site TheLayoff.com, in which anonymous Cisco employees from business units such as finance, collaboration, and the Technical Assistance Center (TAC) across different geographies have self-reported layoffs from within their business units.

Although it‘s sad to see friendly faces leave the company, the Cisco partner said that executive departures -- whether they left as part of the voluntary retirement program or were let go -- creates an opportunity for the channel to step in and take a more dominant role.

“I don‘t think Cisco is going to replace all of its roles, so the channel is going to be more relevant,” the Cisco partner said. ”It’s challenging our team to step up and lead, rather than taking a back seat.”

While some channel roles may be changing, new roles are also being created within the organization, the Cisco spokesperson said.

“Partners are still the number one priority and we are making sure we have the leaders in place to support them in every facet of business,” the spokesperson said.

During its most recent earnings call in August, Cisco reported revenue declines across nearly every segment, with the exception of security. Overall revenue declined 13 percent year-over-year. The company also made a surprise revelation that Kelly Kramer, Cisco‘s CFO since 2015, would be leaving the company once her successor is named.