The layoffs will affect seven percent of the company’s workforce.
Cisco Systems is shifting its focus from hardware to high-margin software and part of the transition requires eliminating 5,500 jobs in order to reinvest in key growth areas such as security, the Internet of Things (IoT) and the cloud.
Revenue at the company’s routers business fell six percent in the fourth-quarter period ending July 30, while switching unit revenue increased by two percent. Orders from service providers decreased by five percent, and revenue in emerging markets fell six percent according to Cisco’s earnings report. Security posted a 16 percent gain in the earnings period.
Cisco CEO Chuck Robbins has been guiding the company toward software and subscription-based services since he took over in July 2015.