Cisco will not lay off employees in Israel, but will reduce travel expenses by 60%. Intel Israel today announced it would not recruit new employees in place of those leaving and will also cut expenses.
The two global companies announced at the end of the week they were laying off thousands of employees, leading Nasdaq to its lowest point in over 27 months.
Cisco Israel CEO Gary Drutin said that the Israeli branch of the global communications conglomerate would not lay off employees. The cutbacks announced at the end of the week involve the “release from employment” of 2,500 temporary and subcontracted workers worldwide and reduction of employees’ travel expenses by an expected 60%.
Cisco employs 400 staff in Israel, 50 of whom are in marketing and the rest development personnel of start-ups acquired by the company. Company sources told “Globes” that since the Israeli branch does not employ temporary staff, it would not lay off employees.
Drutin noted that company policy dictates the replacement of 5% of its workforce per year, in the context of ongoing restructuring. He said that the Israeli branch develops the technology expected to enable Cisco to lead the communications market in the future.
Cisco acquired Class Data in Israel in June 1998 for $50 million. In 2000, Cisco bought out Infogear, Pentacom, and Seagull for $301 million, $118 million, and $38 million, respectively, all within one month. In September 2000, Cisco acquired Hynex from Elbit Medical Imaging in a share swap worth $129 million at the time. Cisco’s investments in Israel include Harmonycom, Mysticom, Terayon, Netro, OrAccess, Ensemble, CyOptics, and Be Connected.
The Intel Israel spokesman said that no layoffs are planned in Israel, but new employees would not be recruited. Every position left open would be filled from the existing workforce, except for a few jobs requiring an external employee.
The spokesman said that the company is streamlining expenses, including a reduction in overseas trips by employees. Concerning the expanding of the existing fabs and the construction of the new fab in Israel, the spokesman said that plans had not been changed for the present.
The recent shakeups in major companies have also affected their Israeli branches. 3Com shut down its Israeli VBN development division and fired 35 out of 50 employees. Nortel closed its development division (formerly the start-up Armon) and fired all 50 staff. Lucent shut down its Wave Access division, which is still looking for a buyer, and fired 150 employees.
Published by Israel's Business Arena on March 11, 2001