Getty Images

Cisco CEO Chuck Robbins: IT spending could slow

Cisco CEO Chuck Robbins said companies could reduce spending but are unlikely to slash budgets because technology has become a revenue driver.

Cisco CEO Chuck Robbins acknowledged that stock market volatility and high inflation and interest rates could cause a slowdown in the global IT market.

Nevertheless, he said he did not expect the current economic conditions to have the same impact they would have had a decade ago.

In the past, C-suite executives would have slashed IT spending to reduce expenses, Robbins said Tuesday at Cisco Live. Now, executives see IT as driving the company's core business.

"I'm not naive that things could slow down, and [companies] could push projects out," Robbins said during a meeting with reporters and analysts. "But not like you would have seen in the past, when [IT] was seen as a cost center."

The change in executive attitudes is "a monumental shift in thinking," he said.

Robbins pointed to how Cisco customers Ford Motor Co. and Bank of America have used technology to drive revenue through customer services. Ford President and CEO Jim Farley plans to invest $50 billion by 2026 to build internet-connected electric vehicles.

Chuck RobbinsChuck Robbins

"There's an understanding of the power of the technology," Robbins said of the companies.

Technology's importance was demonstrated during the pandemic, when companies used it to keep employees working from home on laptops. Today, Cisco customers have had to adjust to employee demand to continue working from home at least two or three days a week.

Many of those companies continue experimenting with collaboration tools like video conferencing, which can't adequately serve all the needs of a hybrid workforce, Robbins said.

"They're solving for hybrid work by looking at collaboration on a meetings platform, as opposed to a holistic experience," he said.

Robbins goes easy on the Biden administration

Robbins avoided criticizing the Biden administration on its handling of the U.S. economy. Last year's $1.9 trillion relief package to help the unemployed during the pandemic contributed to today's high inflation rate, economists said.

That consequence wasn't certain at the time because no one had experience navigating a global pandemic, Robbins said. "[So] I would stop short of criticizing them."

But the Federal Reserve and the administration should have adjusted to the impact of the stimulus package sooner, he said. Then again, eight months ago, no one could have foreseen a war in Ukraine and soaring oil prices.

"It's a complicated world, and they're navigating a lot of moving parts," Robbins said.

Also contributing to the world's economic turmoil is a global supply chain recovering from production and shipping disruptions.

Cisco can't get enough semiconductors because "every product on the planet now seems to have one or more semiconductors in it," Robbins said.

He expected the supply to improve significantly next year as PC demand slows. Also, component inventories at brokers have increased a bit.

"We're starting to see some good signs, but I still think we're three, six or nine months to where we really get this thing resolved in a way that's acceptable to our customers, honestly," Robbins said.

Next Steps

IRL: Cisco Live 2022 goes full-stack o11y

Dig Deeper on

Unified Communications
Mobile Computing
Data Center