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Economic Perspective: Cisco Shakeup

Economist Mike Walden

MARY WALDEN:

“Today’s program looks at the Cisco shakeup. Mike, recently the tech giant Cisco Systems announced major employee layoffs. Perhaps as high as 14,000 cut worldwide. Since Cisco has one of its largest facilities in the Research Park area of North Carolina, this employment reduction will affect our state. Does this move by Cisco signal problems in the technology sector which has become very important to North Carolina.”

 

MIKE WALDEN:

“I don’t think it signals problems. I think it simply signals the fact the technology sector has been changing and will continue to change. The technology sector of the past may not be the technology sector of the future.”

“Specifically in Cisco’s case, they made their money in the past making switchers and routers which were based on land-based, if you will, computing systems, desktops et cetera. Now people are going to cloud based computing systems. They’re storing their data in the cloud where software is more important, and so Cisco is making changes.”

“They’re going to reduce their employment in switches and routers, and that’s, I think, really where the layoffs are coming. They’re probably going to upgrade their use in cloud-based computing where software is very important. So I wouldn’t be surprised, down the road perhaps, to see some new hiring by Cisco. But I think again, more importantly, this shows the fast paced changes in the technology systems.”

“The fact is that qualifications and skills needed in the technology system area is going to continue to change. I think it has implications for workers there who need perhaps to recognize this. They may need to get retrained down the road, but I don’t think it signals anything bad about technology, nor do I think it signals anything bad about the Research Triangle area of North Carolina. I think it will still be very, very attractive to the technology sector.”