Cisco Cuts 4,000 Jobs on a New Strategic Path. Is CX Being Left Behind?

Cisco had every reason to celebrate this week. It reported record quarterly revenue of $15.8 billion for its third fiscal quarter of 2026, up 12 percent year on year, and product orders growing 35 percent. From an investor standpoint, the pressure was seemingly off. Its stock leapt 15 percent on the announcement, which follows a strong year, with shares up more than 30 percent since the start of the year. Alongside these headline figures, however, came news of a workforce reduction of around 4,000 employees, representing nearly five percent of its total headcount.

The restructuring, Chuck Robbins, Chair and Chief Executive Officer of Cisco, made clear on the earnings call, is not a distress signal: "To ensure we are capturing the significant opportunities in silicon, optics, security and AI, we announced a restructuring plan today to reallocate resources and allow us to invest in these key growth areas."

In an email to employees later shared via a company blog post, Robbins framed the layoffs as a strategic imperative: “The companies that win in the AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest."

Cisco is doubling down on its proprietary Silicon One chip architecture, its Acacia coherent optics business and next-generation security. It has also unveiled a working research prototype of a Universal Quantum Switch, designed to route quantum information at room temperature over standard telecom fibre. The Acacia business alone is on track to grow over 200 percent year on year in fiscal 2026. In many ways, Cisco appears to be taking a page from Nvidia's playbook: control the silicon, control the supply chain, define the AI infrastructure layer.

For those in the customer experience industry, the picture is harder to read. Collaboration revenue fell one percent in the quarter, with Mark Patterson, Executive Vice President and Chief Financial Officer, noting "declines in Webex, partially offset by growth in devices". That single reference was the only mention of Webex across the entire earnings announcement and call. There was no discussion of new AI developments for Webex Contact Center, no reference of Webex AI Agent, which positions itself within the growing agentic AI layer, nor any mention of Webex Connect.

Whether that silence reflects a deliberate deprioritisation of its CX arm is not certain. What we can see, however, is that Cisco's strategic narrative is being shaped almost entirely around infrastructure, silicon and security, rather than applications or customer-facing platforms.

Splunk, a subsidiary of Cisco with relevance to CX as a backend technology, did get some airtime for its transition from on-premise to cloud, though this had resulted in “a near-term drag on revenue growth”, albeit expected. For CX teams that rely on data infrastructure to power their AI stack, Splunk's transition period is worth monitoring.

AI is forcing technology leaders to make difficult calls about where to place long-term bets, and those decisions rarely gain universal approval. Another appearing to dial down its focus on customer experience is Freshworks, which recently cut 11 percent of its workforce and plans to invest the savings into its employee experience offering instead. Cisco's choices are different in character but raise a similar question: where does CX rank in the new AI-era business hierarchy?

Even though bets are being placed, you can be sure no one has a crystal ball. Robbins himself acknowledged the uncertainty it is are dealing with: "These results are even more impressive given the complex environment we're operating in — a rapidly changing market, with intensifying competition, and a global shortage of components critical to support our portfolio and the AI buildout from our customers." Nevertheless, it is important to keep an eye out for any strategic patterns forming across AI in CX and the wider industry going forwards.