What is a belt tensioner? Cisco CEO plans $1 billion budget increase to retain employees

Chuck Robbins, CEO of Cisco Systems, told managers earlier this month that the networking hardware leader would increase its operating expenses by $1 billion over the next 12 months, in part to increase employee salaries to stem the rise in departures, a person with Direct knowledge of the situation. . Robbins made the surprising comment after the company’s revenue growth stabilized in the quarter that ended in July and after a 12-month period in which Cisco cut its operating expenses as free cash flow declined. The company did not discuss Robbins’ plan in its quarterly earnings report or conference call on Wednesday.

Cisco’s move might seem unusual, given the belt-tightening that’s happening almost everywhere in the tech sector. Most of the major tech companies, including Google, Meta Platforms and Oracle, are freezing hiring, laying off employees or laying off outside contractors and projects as their growth slows. At the same time, these companies are facing enormous pressure to retain employees in a tight labor market after some workers expressed concerns about their salaries 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.

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