Cisco’s “AI Won’t Cost Jobs” Claim Undermined by 221 Layoffs

Cisco Systems has announced it will lay off 221 employees in its Milpitas and San Francisco offices, undermining CEO Chuck Robbins’ recent assurance that “AI isn’t going to directly cost people their jobs.” The majority of the cuts—157 roles—are in software engineering at its Milpitas campus, with all terminations effective October 13 following employee notices issued on August 14. The California Employment Development Department filings have drawn scrutiny from law firm Strauss Borrelli, which is investigating possible violations of the federal WARN Act requiring 60 days’ notice for mass layoffs.

These layoffs coincided with Cisco’s release of strong fourth-quarter and fiscal-year 2025 earnings. Q4 revenue climbed 8% year-over-year to $14.7 billion, while full-year revenue rose 5% to $56.7 billion. Despite these gains, CFO Scott Herren described the action as a “reallocation versus a headcount savings” exercise, framing reductions as strategic repositioning toward burgeoning Hybrid AI workloads.

Just one week earlier, Robbins told CNBC, “I don’t want to get rid of a bunch of people right now. I don’t want to get rid of engineers. I just want our engineers we have today to innovate faster and be more productive and that gives us a competitive advantage.” Yet Cisco’s decision follows a broader tech-industry paradox: companies posting record revenue while cutting headcount amid an AI hiring slowdown. Microsoft, for instance, has announced 15,000 layoffs in 2025 despite highly profitable quarters—a phenomenon Satya Nadella dubbed the “enigma of success in an industry that has no franchise value.”

Cisco’s 2024 layoff cycle offers precedent: the networking giant trimmed thousands of jobs even as it reported $10.3 billion in annual profit. With plans to expand AI research and product development next year, market observers warn that further cuts may lie ahead. Meanwhile, peers such as Atlassian sparked controversy by terminating 150 employees via pre-recorded video, highlighting increasing adoption of automated processes in workforce management.

The Cisco layoffs spotlight the tension between AI-driven innovation and workforce stability. On one hand, AI integration promises productivity enhancements and competitive edge; on the other, rapid automation can displace skilled personnel. Labor advocates argue for transparent reskilling programs and phased AI adoption to mitigate job losses. In contrast, corporate leaders prioritize agility and cost efficiency, often resorting to headcount reductions under the guise of “reallocation.”

As tech companies embrace generative AI, the question remains whether they can balance disruptive technology adoption with ethical employment practices. Can Cisco and its peers develop frameworks that foster AI-led growth without repeating the cycle of revenue-driven layoffs? Or will an overemphasis on short-term productivity gains continue to fuel workforce insecurity in the AI era?