This is just depressing.

Pink slip season

Although technology giant Cisco posted a profit of $10.3 billion last year, it is still laying off 5,500 employees as part of its efforts to invest more in AI. SFGATE reports.

This puts it in a long list of other companies, including Microsoft and Intuit, the maker of TurboTax, that have used AI to justify mass layoffs of their workforce.

The layoffs at Cisco were announced this week in a notice to the US Securities and Exchange Commission (SEC) and affect seven percent of the workforce.

In a brief statement, CEO Chuck Robbins used the term “AI” five times, emphasizing the company’s efforts to keep up in the ongoing AI race.

Earlier this year, Cisco also laid off 4,000, or five percent, of its employees, saying the company wanted to “realign the organization and enable further investment in key focus areas.”

In short, companies are no longer hiding their optimism about replacing human labor with AI – an unfortunate reality for those who want to keep a permanent job. But whether this “re-orientation” will pay off in the long run remains to be seen.

Diversionary tactic

The layoff news sent Cisco’s stock price soaring on Wednesday, rising from $45.04 in the morning to over $48 per share in after-hours trading.

We have already seen similar spikes in the share prices of other technology companies that announced layoffs.

The layoffs at Cisc are also part of another pattern: technology companies say they are shifting resources to increase their AI efforts and are therefore laying off employees as part of a restructuring campaign.

While many companies outwardly use AI as a cover for their restructuring efforts, experts remain skeptical and believe the technology serves more as a smokescreen.

“The fight against robots is a nice cover story,” said economist and data scientist Fabian Stephany of the University of Oxford Business Insider earlier this year. “But when you look closer, it’s often simple old-school economic dynamics like outsourcing or lead management cutting costs to increase salaries elsewhere.”

More on layoffs in the technology sector: Microsoft lays off 1,500 employees and blames “AI Wave”