Cisco announced another 6000 job cuts in the Q4 2014 Results announcement yesterday in addition to the 5000 job cuts announced last quarter. Cisco has (or had) approx. 75000 employes so that’s a lot of jobs (more than 20%) in a short period of time and this leaves me pondering the impact to the products that I buy ? Similar problems exist at Juniper who has been shedding large numbers of jobs.
As a network architect I take time to broadly evaluate the financial position of my vendors and consider if this impacts my network strategy. Most of my clients are Cisco-only and this has direct bearing on their businesses.
Edit: I’ve seen some reports that Cisco isn’t reducing head count overall. It will grow headcount in successful business units like UCS and Security but will reduce head count through cuts in non-growth units. My guess is that “non-growth” likely means Enterprise products like Catalyst switches, WAAS, Workgroup routing etc. Its likely the low end enterprise products will see job losses.
Does this mean less products, less testing and lower quality ? cutting heads has to come from somewhere in the labyrinth of Cisco business units. No announcements on shutting down products like WAAS, IronPort or which business units will be affected like set top boxes or video conferencing. Juniper has sold off its Pulse business unit and more are rumoured.
What about testing and assurance ? It would be easy to terminate employees who do quality assurance and lab testing. It takes a few quarters for the problems to arrive at the customer in the form of bugs. Cisco software has a reputation for shipping early and often with little testing or code quality and could place further dependence on customers finding bugs and reporting them to the TAC. Its a cheap and low cost form of testing.
Startups get their wings and compete with Cisco A consistent theme in startups, especially in US but more often from India, is that most employees are ex-Cisco or ex-Juniper. As big companies reduces in size and release skilled employees, this drives growth in startups that compete with Cisco.
Startups cost Cisco money. There are extra overheads in marketing to beat them or buy them.
Disorganisation Disrupts Focus The personal cost for employees at Cisco in been consistent as divisions are closed, merged and people worry about their jobs. The last time I met a Cisco account manager was 3 years ago and the Account SE was only available by phone or email. Cisco claims that it has account control through its sales force but that isn’t my experience.
- Cisco remains a strong company but I am little concerned that the job cuts could impact product quality if testing and quality assurance is reduced. Cisco support services are noticeably lower in delivery and responsiveness, perhaps due to the cutbacks as well.
- Its possible that some product lines could be discontinued to cut costs and meet the ambitious profit targets promised to shareholders.
- I will recommend that customers keep a close eye as Cisco struggles to transition its business and evaluate secondary suppliers as time permits.