Despite tech conglomerate Cisco posting $10.3 billion in profits last year, it’s still laying off 5,500 workers as part of an effort to invest more in AI, SFGATE reports, It joins a litany of other companies like Microsoft and Intuit, the maker of TurboTax, that have used AI as justification for the mass culling of its workforce.
The layoffs at Cisco came to light in a notice posted to the Securities and Exchange commission, affecting seven percent of its staff. In a short statement, CEO Chuck Robbins used the term “AI” five times, highlighting the company’s efforts to keep up in the ongoing AI race. Earlier this year, Cisco also laid off 4,000 or five percent of its staff, saying that the company wanted to “realign the organization and enable further investment in key priority areas.”
In short, companies are no longer hiding their optimism over replacing human labor with AI, an unfortunate reality for those looking to maintain a stable job. But whether this
“realignment” will pay off in the long run remains to be seen.
Red Herring
The layoff news helped boost Cisco’s stock price, going from $45.04 in the morning to spiking over $48 per share in after-hours trading. We’ve already seen similar spikes in the stock prices of other tech companies announcing layoffs.
Cisc’s layoffs are also part of another pattern: tech companies saying they are shifting resources to boost their AI efforts and therefore they need to lay off people as part of a restructuring campaign.
While many companies have used AI as a public-facing excuse for their restructuring efforts, experts remain skeptical and think the tech is instead used as a cover.
“Fighting against robots is a nice cover story,” University of Oxford economist and data scientist Fabian Stephany told Business Insider earlier this year. “But if you have a closer look, it’s often old school, simple economic dynamics like outsourcing or lead management cutting costs to increase salaries in other places.”
Unwavering Dedication
Off the back of a strong third quarter, Microsoft is reportedly laying off somewhere between 1,000 and 1,500 across its Azure cloud and mixed reality departments. And in a leaked memo as tone-deaf as it is bland, an executive at the company proclaimed that their peons’ sacrifices are not in vain, for they are being done on the altar of the almighty “AI wave.”
“Our clear focus as a company is to define the AI wave and empower all our customers to succeed in the adoption of this transformative technology,” wrote Jason Zander, executive vice president of Strategic Missions and Technologies at Microsoft, in an email to employees, as quoted by Business Insider, he writes. “Along the way, we make decisions that align with our long-term vision and strategy while ensuring the sustainability and growth of Microsoft.”
For a Few Billion More
Layoffs at big tech companies are obligatory these days, even though the corporations are more powerful and wealthy than ever. This is frequently chalked up to systemic overhiring — which may well be true to a certain extent — but it’s clear that those jobs are also being swept out to make room for investments in AI.
Microsoft last year, for example, laid off 10,000 employees right as it announced it was shoveling another $10 billion in OpenAI. Among those fired was every single person who worked in the company’s AI “Ethics and Society division — a dismal sign of things to come.
Since then, it’s emerged that the company is reportedly willing to spend an eye-watering $100 billion to build a supercomputer to train an advanced new AI. And despite its existing hefty investments in OpenAI, Microsoft also reportedly wants to develop its own large language model.
Brain Drain
Those investments come at a cost: monetary, of course, but also human. The layoffs at Microsoft have been less sweeping this year, but behind the scenes, there’s a lot of reorganizing going on, including the formation of a whole new division simply called “Microsoft’s AI” as the company shifts more workers to projects like Copilot, its ChatGPT-like assistant.” It’s never easy to make these tough decisions, particularly when they affect our colleagues and friends,” Zander wrote, affecting their best impression of a human that’s torn-up about their actions. “We’re dedicated to supporting everyone impacted by these changes with respect, dignity, and transparency to fully support them through this transition.” The use cases that would be “productive,” and have thus been the most hyped, have seen less success in AI adoption. Hallucination starts to become a problem in some of these cases.
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