Cisco has just become the latest company to link planned job cuts to AI, sparking the usual fears about a robot takeover and mass unemployment. Either the machines eventually kill us, and Skynet replaces homo sapiens as Earth’s dominant species, or the machines pamper us like overindulged pets, and we evolve into the docile blobs of WALL-E. Pick your dystopia – 1984 or Brave New World. Neither sounds ideal, but that has not stayed the executioner’s hand. In a blog accompanying Cisco’s latest results, CEO Chuck Robbins said 4,000 jobs will be cut by the end of July as investment shifts into AI.
When the slaughter is over and the smoke lifts, Cisco would have about 82,200 employees, judging by the figure it gave for headcount last July in a filing with the US Securities and Exchange Commission (SEC). That seems unlikely to have changed significantly since then, with Robbins reckoning planned cuts represent “less than 5% of our total employee base.”
Talking about layoffs and AI in the same breath has become a preferred tactic of company bosses who would rather associate any cost-cutting exercise with the latest big thing – and not blame it on other, more prosaic factors. In Cisco’s defense, its latest results show third-quarter sales increased by 12% year-over-year, to $15.8 billion, and its net income rose 35%, to $3.4 billion. The provider of Internet connectivity products is clearly benefiting from demand for AI. Its share price is up 34% so far this year, to nearly $102, and is even higher than it was during the dotcom boom of 2000, when it hit about $80.
Yet 5% is not a huge amount in comparison with the scale of cuts happening at other technology companies and connectivity providers. Ericsson slashed headcount by 6% last year, finishing it with fewer than 89,000 employees. Nokia, a direct competitor to Cisco, has cut about 8% of its workforce in the last couple of years and had an average of 78,000 employees in 2025. Chipmaker Intel has been even more aggressive in response to business problems, slashing headcount by almost 40,000 positions or 32% of the earlier total since 2023.
The robots aren’t coming
While it may sound callous, Cisco was also probably overdue a trim. The acquisitive company’s workforce had swelled from 74,200 people in 2018 to 90,400 in fiscal 2024. Its SEC filings indicate 4,200 jobs had disappeared without fanfare or Robbins-authored blogs by the end of fiscal 2025. That still leaves Cisco generating lower revenue per employee than it did seven years before. In 2018, the figure was about $665,000. Last year, it had shrunk to roughly $657,000. Even after the latest round of layoffs, Cisco will employ 8,000 more people than it did in 2018.
It would also be a mistake to assume AI is necessarily replacing jobs at Cisco. If this were the case, investors would expect to see growth in profitability as lower-cost AI usurps more expensive workers. Why use AI otherwise? Yet Mark Patterson, Cisco’s CFO, said it would be wrong to think cuts will improve operating leverage. “With regard to the restructuring, this was really not a savings-driven restructure,” he said on Cisco’s earnings call, answering analyst questions. “Things are moving incredibly fast right now and this is more realigning – from an already strong base, as you’re seeing in our financials – but realigning resources around silicon optics security and AI.” The move is, therefore, about having the right resources in the right places rather than savings, he continued.
What’s unclear, then, is whether the 4,000 cuts will be offset – to at least some extent – by recruitment in faster-growing parts of the business catering to optical needs and AI demand. Cuts at Nokia, for instance, have been focused on the ailing mobile business as resources shift toward network infrastructure, the business group that designs routers, switches and optical network products, sold partly to AI data center customers.
Notwithstanding Patterson’s denial this is a savings move, layoffs could also form part of Cisco’s cost-mitigation strategy. Surging demand for AI has driven up the price of components used in its products, particularly memory chips, which received a lot of attention on the earnings call. More than 20 programs have now been launched by Cisco to reduce memory use, said Patterson. Higher prices will undoubtedly exert pressure on other companies to find savings elsewhere. AI could have an impact on the workforce not by directly taking jobs but as companies are forced to spend more on materials.
What’s to like?
For all the doom mongering, there is scant evidence AI has boosted productivity or benefited anybody apart from the infrastructure vendors and a few giant Big Tech providers. US GDP growth fell from 6.1% in 2021 to 2.5% in 2022, when ChatGPT was released. Last year it was 2.1%. A recent survey from SAP-owned WalkMe identified a major rift between bosses and workers in perceptions of AI. Executives foist it on employees and insist it has significantly improved productivity while staff say they are wasting a day a week dealing with AI-generated “digital frustrations,” according to the survey.
Most ordinary people seem to detest it, too. Dislike and fear of it is, seemingly, the one thing that unites Democrats and Republicans in the US, says Edward Luce in a Financial Times opinion piece (paywall may apply). AI’s apologists continue to spout platitudes about it creating new jobs even as it destroys many without explaining how a low-cost “superintelligent” software would leave the human brain with any workspace to occupy. Others, apparently reconciled to a future of Great Depression-level unemployment, cannot say why this would be economically or societally good.
In a sign of the growing backlash, a video has gone viral of a real-estate executive being loudly booed by humanities students at the University of Central Florida after praising AI as “the next industrial revolution.” Visibly flabbergasted, Gloria Caulfield then prompted even louder cheers and clapping when she recalled that “only a few years ago, AI was not a factor in our lives.” Robbins and AI’s other architects would do well to heed such reactions.