Cisco Announces Major Layoffs Despite CEO’s Denial of AI-Related Job Cuts

Days after CEO Chuck Robbins publicly rejected the idea of laying off employees to make room for artificial intelligence, Cisco Systems announced a new wave of layoffs, removing 157 positions in California.

The action has drawn legal attention, which has made the company’s attempts to strike a balance between cost containment, shareholder returns, and an expansion strategy driven by AI even more difficult. Employees at a number of Cisco locations will be impacted by the layoffs, with the Milpitas facility seeing the most. According to CRN, 64 more jobs will be lost in San Francisco, while employees at the company’s Pleasanton branch and previous Redwood City headquarters will also be affected.

According to sources, the positions being terminated range widely, from entry-level workers to top executives, including vice presidents. The layoffs’ timing has drawn criticism. Robbins only stated to CNBC this week that he has no plans to use AI as a cover for cutting staff. He emphasised that he wanted engineers to “innovate faster and be more productive” rather than “fire a bunch of people right now.”

Legal Investigation: Possible WARN Act Violations

Strauss Borrelli, a Chicago-based legal firm, has declared that it is looking into whether Cisco complied with the Worker Adjustment and Retraining Notification (WARN) Act, which mandates that companies in the United States give 60 days’ notice before executing mass retirements. In the past, Scott Herren, the chief finance officer at Cisco, referred to job losses associated with AI deployment as a “reallocation versus a headcount savings” effort.

However, the most recent round comes after two significant worker reductions in the last year: a 5% global decrease in February 2024 and a 7% cut announced in August 2024, both of which the business claimed would maximise shareholder value. Strauss Borrelli stated in a statement that it was investigating whether impacted Cisco workers had been given enough notice and were eligible for benefits and severance pay for 60 days.

According to reports, employees were notified of the layoffs on August 13th, before the mid-October employment terminations were scheduled. The law firm has questioned whether the correct procedures were followed, even if the dates seem to meet WARN’s standards.

“We are looking into whether Cisco violated the WARN Act by terminating 157 employees without giving at least 60 days’ notice,” Strauss Borrelli stated. Regarding the legal investigation, the business has not made any public remarks.

Cisco’s AI Growth Amid Job Cuts

The layoffs take place as Cisco’s AI-related business is expanding rapidly. The business recently revealed that its AI-related revenues for the fourth quarter of fiscal 2025 totalled $800 million, bringing its yearly total to $2.1 billion. Robbins informed investors that the majority of this revenue was derived from hyperscaler clients, with the other two-thirds being connected to Cisco’s optical portfolio.

Impact on Employees and Leadership Shake-Up

Cisco’s strategic investment in AI infrastructure as a long-term growth engine is highlighted by the financial gain. However, it also draws attention to the paradox of reducing employment while announcing record profits from one of the sectors of the economy with the strongest rate of growth.

Cisco has announced changes to its senior levels in addition to the job losses. According to CRN, Tim Coogan, senior vice-president for U.S. commercial operations, will succeed Rodney Clark as global partner sales head.