When Cisco celebrated the fifth anniversary of its New England Development Centre 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 moving 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" (LR) 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 US 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 US federal labour regulations.
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 percent of the employer's total workforce at a single employment site.
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. IBM reportedly skirted public disclosure of incremental cuts in its North America workforce that amounted to a reduction of more than 4,000 positions.
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, NC, and Scotland were outsourced to Tech Mahindra in India during that time.
Cisco says the actual number is roughly 40 percent 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 email 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 percent 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 4 Feb., 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.
"I wonder what Cisco sees as the difference between 'outsourcing' and a reorg that sent work to Cisco India and other areas," asks one Cisco source. "Aren't they one and the same thing? The bottom line is American engineers lost their jobs which were moved to India and other places because the other areas offered cheaper labour."
Adds another Cisco source: "A whole lot of US-based jobs were lost that you are not hearing about from Cisco."