What Belt-Tightening? Cisco CEO Plans $1 Billion Budget Increase to Retain Employees

Cisco Systems CEO Chuck Robbins told managers earlier this month that the networking hardware pioneer would increase its operating expenses $1 billion over the next 12 months, in part to raise employee pay to stem a rise in departures, said a person with direct knowledge of the situation. Robbins made the surprising comment after the company’s revenue growth flatlined in the quarter that ended in July and following a 12-month period in which Cisco shrank its operating expenses as its free cash flow fell. The company didn’t discuss Robbins’ plan in its quarterly earnings report or conference call on Wednesday.

Cisco’s move may seem unusual, given the belt-tightening happening almost everywhere else in the tech sector. Most major technology companies, including Google, Meta Platforms and Oracle, are freezing hiring, laying off employees or cutting contractors and extraneous projects as their growth slows. At the same time, these companies face enormous pressure to retain employees in a tight labor market after some workers have expressed concerns about their pay amid rising inflation. Earlier in the year, before macroeconomic conditions deteriorated further, managers’ concerns about employee turnover prompted Microsoft and Amazon to announce broad pay increases.