by Utkarsh Shetti and Supantha Mukherjee

(Reuters) – Cisco will lay off several thousand people in its second round of layoffs this year as the U.S. networking equipment maker focuses on higher-growth areas including cybersecurity and artificial intelligence (AI), people familiar with the matter said.

The number of people affected could be similar to or slightly higher than the 4,000 employees Cisco laid off in February, and will likely be announced as early as Wednesday with the company’s fourth-quarter results, said the people, who were not authorized to speak publicly on the matter.

Reuters reported in February that Cisco, headquartered in San Jose, California, was taking layoffs before the company announced them.

The group, which did not immediately respond to a request for comment, employed about 84,900 people as of July 2023, according to its annual report.

Cisco, the largest maker of networking gear to direct internet traffic, has faced sluggish demand and supply chain constraints in its core business.

This situation has pushed the company to diversify by buying, for example, the cybersecurity company Splunk, for an amount of 28 billion dollars (25.63 billion euros), the acquisition of which was finalized in March.

Cisco has also tried to incorporate AI products into its offerings and in May reiterated its goal of $1 billion in AI product orders by 2025.

A $1 billion fund for investments in AI startups such as Cohere, Mistral AI and Scale AI was launched in June.

To compensate for major investments in AI, companies in the “Tech” sector have significantly reduced their costs this year, notably through significant layoffs.

More than 126,000 people have been laid off at 393 tech companies since the start of the year, according to data from the website Layoffs.fyi.

In early August, chipmaker Intel laid off more than 15 percent of its workforce, or some 17,500 people, in an attempt to turn around its loss-making business.

(Reporting by Utkarsh Shetti in Bangalore and Supantha Mukherjee in Stockholm; by Kate Entringer; editing by Sophie Louet)

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