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Cisco quietly downsizing through outsourcing

Network management group reshaped by Cisco via "limited restructurings."

By , Network World
March 12, 2009 12:05 AM ET

Network World - When Cisco celebrated the fifth anniversary of its New England Development Center in Boxborough, Mass., last fall - a ceremony attended by Massachusetts Congresswoman Niki Tsongas and a representative from Gov. Deval Patrick’s office - the company was quietly preparing to move several jobs from there and other locations to contractors in India and elsewhere, mostly in the company's Network Management Technology Group (NMTG).

In Cisco parlance, a “limited restructuring” was underway, under the radar.

These “LRs,” as Cisco sources call them, are a way for the company to cut costs by reducing workforce in small, incremental moves without having to publicly announce or disclose the actions in compliance with U.S. Department of Labor regulations, like the Worker Adjustment and Retraining Notification Act (WARN). These specific NMTG LRs are separate from the planned reduction of 1,500 to 2,000 positions Cisco announced during its earnings call last month, which, the company says, complied fully with WARN and other federal labor regulations.

(Cisco may not be alone in avoiding disclosure of smaller job cuts.  IBM reportedly skirted public disclosure of incremental cuts in its North America workforce that amounted to a reduction of over 4,000 positions.)

Cisco says it filed two WARN notifications in the past six months for actions at its San Jose headquarters and another for operations in Richardson, Texas.

Enacted in 1989, WARN requires most employers with 100 or more employees to provide 60-day advance notice of plant closings and mass layoff of employees. Exemptions to WARN notifications include a plant closing or layoff that results in fewer than 50 workers losing their jobs at a single employment site; or if the number of employees losing their jobs is less than 33% of the employer’s total workforce at a single employment site.

 

Cisco says it has been restructuring the NMTG for up to a year. Sources within Cisco say as many as 128 positions from NEDC, Research Triangle Park, N.C., and Scotland were outsourced to Tech Mahindra in India during that time.

Cisco says the actual number is roughly 40% less.

“Cisco is constantly evaluating its business priorities, resources and overall employee alignment as part of our normal business process,” the spokesman stated in an e-mail to Network World. “The restructuring activity in our Network Management Technology Group in Nov. 2008 was part of an ongoing realignment of resources. The NMTG restructuring impacted less than 10% of the unit's workforce and was not part of the company's broader realignment and restructuring plans that were discussed on our fiscal second quarter 2009 earnings call on Feb. 4, 2009.”

Sources say Cisco vanquished another 87 positions at the NEDC that were involved in IOS software regression testing, development and maintenance of the 10000 series routers, and the new ASR 9000 router. Cisco claims less than half of those positions were impacted, and that none were outsourced -- the remainder were shifted to Cisco India and other company locations.

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