Massive worldwide job losses at Cisco Systems have spread to Australia and New Zealand, with the company confirming it has been forced to reduce expenditure on contractors in the region.
Cisco has been trying to de-emphasise the impact of the cuts in the local market by focusing on the fact that it is cutting back on "temporary" contractors. However, this belies the fact that it has been hiring contractors in lieu of full-time positions for many months now, a common practice of many multinationals in Australia that need to keep their full-time head count off the books.
The local job cuts are in addition to a 60 per cent reduction on travel by the region's Cisco staff, the company's regional managing director, Terry Walsh, said on Monday. "I have not been advised to reduce any specific head count in this region and have been assured that permanent staff are not affected," he said.
However, Walsh said, it does effect temporary contractors in line with the company's global initiative. "We are expecting advice from the US later this week but have been formally advised to reduce travel and entertainment expenditure by 60 per cent; it is too soon to really assess local impact."
In sales and support alone, Walsh said Cisco has an estimated 340 temporary contractors but didn't want to speculate on the number of job losses. "We are dealing with real people with real families; I think the drop in spending predicted in the services provider market will be more of a US issue than elsewhere."
The networking giant confirmed last week it plans to reduce its workforce of 48,000 employees by up to 8,000 workers. CEO and chairman John Chambers said the cuts include up to 3,000 temporary contract workers and up to 500 regular employees through "consolidation and voluntary attrition".
"We're taking these steps because of the continuing slowdown in the US economy and initial signs of a slowdown expanding to other parts of the world. We also believe that this slowdown in capital spending could extend beyond two quarters," Chambers said in a statement.
He also admitted speculation about a recession in the US manufacturing sector could adversely impact on Cisco this year.
US-based manufacturing companies make up about 20 per cent of Cisco's network enterprising business.