US-based software company Splunk has announced plans to reduce its global headcount by 7% citing uncertainty in the market.

In a statement, Splunk CEO Gary Steele said: “Today, we are making the difficult decision to reduce our global workforce by approximately 7%.

“As we work to finish FY24 and look ahead, we are taking this proactive and strategic step that further aligns our workforce to better enable Splunkers to meet the needs of our customers and partners, while remaining sustainable and cost effective.”

The announcement comes after technology company Cisco signed a definitive agreement in September 2023, to buy Splunk in a deal valued at around $28bn.

Steele noted that the layoffs are not related to Splunk’s agreement with Cisco.

“The overall market has retracted and we expect the macro environment will continue to be unpredictable for the foreseeable future,” he said.

He added that the move seeks to enhance organizational structure to drive efficiency, sustainability and bolster abilities to navigate the economic uncertainty.

Citing a May filing, Bloomberg reported that the layoffs will impact 560 people based on the headcount of 8,000 in January.

Splunk’s staff in the US will be affected the most and the company expects to take a hit of $42m from the downsizing.

“We will support those who leave Splunk by offering a severance package, healthcare coverage and job placement resources to assist them through this transition,” said Steele.

Splunk is engaged in offering observability services, enabling customers to monitor internal systems to protect against cybersecurity risks.

Cisco expects to complete Splunk’s acquisition by the third quarter of 2024.