Cisco cuts 4,000 jobs despite record revenue to fund AI

CALIFORNIA, UNITED STATES — Cisco is cutting nearly 4,000 jobs — about 5% of its workforce — despite reporting record quarterly revenue and better-than-expected profit in its fiscal third quarter, as the networking company shifts spending from headcount toward artificial intelligence (AI) and cybersecurity, TechCrunch reports.

Record results, fewer workers: Cisco’s AI pivot

CEO Chuck Robbins cited the company’s “record revenue” and “double-digit growth” in a blog post Wednesday, framing the layoffs as a shift in Cisco’s “cost structure” rather than a sign of financial trouble. 

The move marks Cisco’s third significant workforce reduction in under two years, following two separate rounds of layoffs in 2024 that eliminated thousands and an additional 150 jobs cut in 2025. 

Cloudflare and General Motors have also cut staff in recent days despite strong results, part of a broader pattern of companies citing AI investment to justify headcount reductions.

When asked, a Cisco spokesperson declined to say whether Robbins — slated to earn more than $29.1 million in executive compensation in fiscal year 2025, per public filings — plans to reduce his own pay. The spokesperson did not comment beyond Robbins’ blog post statement.

Security vulnerabilities add urgency to the restructuring

The second half of Cisco’s reinvestment rationale is cybersecurity. Vulnerabilities in Cisco routers and firewalls have allowed hackers to breach corporate customers’ networks, including the U.S. government’s.

A data breach in 2025 separately exposed customers’ personal information. The dual investment case — AI and security — gives Cisco broader justification for a restructuring that coincides with record financial performance.

Robbins said Cisco is making strategic investments “in our employees’ use of AI across the company.” That framing — investing in workers’ AI adoption while cutting thousands of positions — reflects a pattern taking hold across enterprise tech: fewer employees, each expected to accomplish more through AI-augmented work.

For business process outsourcing (BPO) and outsourcing companies, Cisco’s move signals an accelerating change in how large enterprises manage headcount. As AI investment justifies workforce cuts even at record-revenue companies, demand grows for outsourcing partners that can absorb displaced functions at lower cost while delivering AI-ready talent. 

The firms best positioned to capture that demand are those already embedding AI capability into their service delivery. That gap — between what enterprises are restructuring toward and what their current teams can deliver — is where outsourcing earns its value.