Cisco's workforce reduction plan to cost up to $550 mn
New York: Networking solutions major Cisco has said its plans to reduce the global headcount by 5 percent will cost the firm as much as USD 550 million in cash on severance, one-time termination benefits and other costs.
The US-based firm had announced in August this year that it will reduce its headcount by about 4,000 employees or 5 percent of its global workforce. Cisco employs over 75,000 people globally, including India.
"The company currently estimates that it will recognise pre-tax charges to its financial results in an amount not expected to exceed USD 550 million consisting of severance and other one-time termination benefits and other associated costs," Cisco said in its 2013 annual report.
The company is rebalancing its resources with a workforce reduction plan that will impact about 4,000 employees or 5 percent of its global workforce. It expects to take action under this plan beginning in the first quarter of fiscal 2014, it added.
The firm follows August-July as fiscal year.
Its annual report does not provide details on workforce reductions in terms of geography. The company has presence in the regions of the US, Latin America, Canada, Asia Pacific, Greater China, Japan, Europe, Middle East, Africa and Russia.
Cisco, which commenced operations in India in 1995, has a significant presence in the country where it employs about 11,500 people.
It has a Global Development Centre in Bangalore, which the firm claims is the largest outside of the US. It also has sales offices in New Delhi, Mumbai, Bangalore, Chennai, Pune, Kolkata and Hyderabad.
"These charges will be primarily cash-based. The company expects that approximately USD 250-300 million of these charges will be recognised during the first quarter of fiscal 2014 with the remaining amount to be recognised during the rest of fiscal 2014," Cisco said in the report.
For the fourth quarter of 2013 fiscal, Cisco reported a revenue of USD 12.4 billion and net income of USD 2.3 billion (GAAP) and USD 2.8 billion (non-GAAP). Revenues for the whole of 2013 fiscal stood at about USD 48.6 billion.