Cisco's latest restructure 'inevitable and smart', say partners

Move to axe up to 5,500 staff an inevitable reflection of Cisco's embracing cloud and software technology that requires lower headcount to scale, say partners

Cisco partners say the vendor's latest restructure is an inevitable reflection of the fact that the software and cloud-based technology it is embracing requires less manpower to scale.

The networking giant last night announced it is eliminating up to 5,500 staff as part of its shift from a primarily hardware business to a software and services business.

In the wake of the announcement, Trip Chowdhry, analyst at Global Equities Research, predicted "there is more pain to come" for the big hardware vendors as more workloads shift to cloud services that negate the need for workers to manage various technology layers, Reuters reports.

Chris Gabriel, CTO at Cisco Gold Partner Logicalis (pictured), agreed that the latest job cuts were necessary for Cisco.

"I think it was an inevitable and probably smart move, because their world is changing," he said.

"Just look at Meraki, look at the CliQr acquisition and CloudLock, and the new Tetration stuff: it is all software or cloud-based where you need fewer people to operate and scale."

The 5,500 figure was well down on what some had foreseen but Gabriel said he had the impression that Cisco feels it is nearing equilibrium in terms of the size and shape it wants to be.

"A lot of new stuff is coming out, and it doesn't feel to me in any way like a retrograde step," he said. "It feels like they are reshaping themselves to get on with the things they want to do. It would have surprised me if there had been a big macro-change because there's so much interesting stuff going on there."

Channel veteran Tom Kelly, who sits on the boards of Cisco partners ONI, BCN Group and Sipsynergy, was also not surprised by the restructure.

"Cisco has bought about 10 business in the past year and now it needs to reshape the business away from the router business and towards that cloud and managed services capability," he said.

"Cisco always tends to be one of the first businesses to come to market in order to initiate change, and where it goes, others follow."

Mike Danson, chief executive of Cisco Gold partner Natilik, also welcomed the restructure.

"They do these things on a regular basis as they realign their resources to the bits they see the market transitioning to," he said.

"It certainly doesn't give me any concerns about our Cisco relationship. In fact it probably makes me continue to think they're a good partner because they're always trying to be in the right place to add value for clients."

Chowdhry yesterday raised his estimate for tech industry layoffs this year to 370,000, up from the 330,000 he predicted in January.

But Gabriel said the industry shift to "third-platform" technologies could actually create jobs in the channel for resellers that seize on new opportunities.

There's change, but the good news is there is a bunch of really exciting new stuff - such as automation, IoT, analytics. It is incumbent on the channel to build new skills to look at new market opportunities and move outside the traditional field of vision," he added.

"If you look at Blockchain and some of the digital currency stuff, and how it will affect finance, insurance and risk, and how that integrates with IoT, is that less work for us to do in the channel, or is it a really exciting opportunity? It just needs a shift."