Cisco To Raise Operating Expenses By $1B To Battle Brain Drain: Report

The tech giant is reportedly planning to raise costs, partly to address salaries and employee departures amid the growing talent shortage issue in the technology space, according to a new report published Friday.


Cisco CEO Chuck Robbins

Cisco Systems is slated to boost its costs by about $1 billion over its fiscal 2023 year, which began on July 31, in part to raise salaries to keep people from leaving the company, according to a new report published on Friday.

Cisco CEO Chuck Robbins allegedly told managers in August that it would increase operating expenses $1 billion over the next 12 months, partly to slow a recent rise in employee departures, the report from The Information said, citing a person with direct knowledge of the situation.

Cisco did not return CRN’s request for comment by publication time.

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[Related: Cisco Networking And Cloud Leader Todd Nightingale To Join Fastly As CEO]

The San Jose, Calif.-based tech giant didn’t discuss the plan to raise operating expenses in its Q4 2022 quarterly earnings conference call on Wednesday evening. Cisco during its last quarter of its fiscal year reported flat revenue, despite revealing in May that it was expecting revenue declines between one and five percent for the fourth-quarter.

Cisco posted non-GAAP earnings per share of 83 cents, a decline of 1 percent year over year compared to 84 cents a year ago and net income of $3.4 billion in Q4 2022, a decrease of 3 percent. The company’s earnings beat Wall Street’s predictions of revenues of $12.78 billion for Q4 2022.

Cisco over the last 12 months -- the company’s fiscal 2022 year -- shrank its operating expenses, making the reported move unexpected. The tech giant has been battling against macro trends in recent months that have affecting the company’s profits, including Russia’s war on Ukraine, COVID-19-related closures in China and supply chain challenges.

One recent high-profile departure announced earlier this month was Todd Nightingale, senior vice president and general manager of Cisco’s Enterprise Networking and Cloud Business and one of the tech giant’s executive leaders. Nightingale is leaving Cisco to join edge cloud company Fastly Inc. as the company’s new CEO effective Sept. 1.

Prashanth Shenoy, a marketing leader of more than two decades for Cisco, also took to LinkedIn this month to reveal that he left the networking giant to join VMware as the company’s vice president of cloud platform, infrastructure and solutions marketing.