Cisco to lose 11,500 staff

Job-cutting drive and sale of manufacturing facility will cost vendor more than $1bn

Cisco is to shed almost one in 10 of its full-time workforce, with 6,500 employees facing the chop.

A further 5,000 workers at the networking titan's manufacturing facility in Juarez, Mexico are to be transferred to the employ of Chinese firm Foxconn. The moves form part of the vendor's grand plan to reduce its annual operational expenditure by $1bn (£620m).

Some 2,100 staffers are taking voluntary early retirement, said Cisco, while the number of employees at vice president level or above will be reduced by 15 per cent. The total reduction in full-time workers will stand at about nine per cent, with all affected staff receiving severance packages and help finding new positions.

On top of these 6,500 staff, a further 5,000 in Mexico will become employees of Foxconn, as Cisco sells its set-top box manufacturing facility in Juarez to the Chinese OEM giant. The deal will take effect next month and no job losses are anticipated, said Cisco. The move is designed to reduce the networking player's long-term cost base and simplify its operations.

Foxconn hit the headlines for all the wrong reasons last year, when a spate of staff suicides saw the media focus on working conditions at its facilities.

Cisco's plan to trim $1.3bn from its operating cost structure was revealed several months ago. Speculation concerning the scale of the job cuts has intensified in recent weeks.

Charges relating to the restructuring will be up to $1.3bn, with more than half of this cost hitting Cisco in its current fiscal quarter, which closes at the end of this month. All the charges will be cash-based.