Cisco CEO Chuck Robbins acknowledged that stock market volatility and high inflation and interest rates could lead to a slowdown in the global IT market.
Still, he said he didn’t expect current economic conditions to have the same impact as a decade ago.
In the past, C-suite executives would have cut IT spending to cut expenses, Robbins told Cisco Live on Tuesday. Today, executives view IT as the engine of the core business of the company.
“I’m not naive that things could slow down, and [companies] could push the projects back,” Robbins said in a meeting with reporters and analysts. “But not as you would have seen in the past, when [IT] was considered a cost center.
The shift in attitude from leaders is “a monumental shift in thinking”, he said.
Robbins highlighted how Cisco customers Ford Motor Co. and Bank of America have used technology to generate revenue through customer services. Ford Chairman and CEO Jim Farley plans to invest $50 billion by 2026 to build internet-connected electric vehicles.
“There’s an understanding of the power of technology,” Robbins said of the companies.
The importance of the technology was demonstrated during the pandemic, when companies used it to have employees work from home on laptops. Today, Cisco customers have had to adapt to employee demand to continue working from home at least two or three days a week.
Many of these companies continue to experiment with collaboration tools like video conferencing, which cannot adequately meet all the needs of a hybrid workforce, Robbins said.
“They solve hybrid working by envisioning collaboration on a meetings platform, as opposed to a holistic experience,” he said.
Robbins goes easy on the Biden administration
Robbins has avoided criticizing the Biden administration over its handling of the US 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.
This consequence was uncertain at the time because no one had experience navigating a global pandemic, Robbins said. “[So]I would stop before criticizing them.
But the Federal Reserve and the administration should have adjusted sooner to the impact of the stimulus package, he said. Then again, eight months ago, no one could have predicted a war in Ukraine and a spike in oil prices.
“It’s a complicated world, and they navigate a lot of moving parts,” Robbins said.
The global supply chain recovering from production and transportation disruptions is also contributing to the global economic turmoil.
Cisco can’t get enough semiconductors because “every product on the planet now seems to contain one or more semiconductors,” Robbins said.
He expects supply to improve significantly next year as PC demand slows. In addition, component stocks at brokers increased a bit.
“We’re starting to see some good signs, but I still think we’re three, six, or nine months away from resolving this issue in a way that’s acceptable to our customers, honestly,” Robbins said.