Cisco to raise investment in the country, banks on Digital India
Cisco Systems Inc., the world’s largest maker of networking equipment, said on Thursday that it plans to increase its investment in India, even start manufacturing locally when the country makes it conducive to do so—all in the hope that it will get manifold returns when the country begins to execute the “Digital India” programme that will require networking equipment to build and connect the envisaged hundreds of smart cities and villages.
Towards this end, both Cisco’s chief executive-designate Chuck Robbins and John Chambers, the current chairman and CEO, met Prime Minister Narendra Modi on Thursday morning. “We were with (Prime Minister Narendra) Modi today and he lived up to every expectation we had of him,” said Chambers, who will become executive chairman of Cisco when Robbins takes charge of the company as CEO on 26 July. Cisco’s financial year begins on 1 August.
Cisco generated about $1.1 billion in revenue from India this financial year, and invests about $1.7 billion annually in the country. Of this amount, $250 million is spent around facilities and the remaining on “people”, according to Robbins.
“Cisco believes our renewed local investments, global expertise, and world-class innovation will accelerate the government’s vision to create sustainable competitiveness and prosperity. We are deeply committed to partnering with India to achieve the digital vision,” he added.
“India could be the first, really large digital nation in the world,” said Chambers, who is visiting New Delhi to, among other things, introduce Robbins to Cisco’s employees and key government officials.
To begin with, Cisco plans for direct and indirect investment of up to $20 million over the next five years into the Cisco Networking Academy, with an additional $40 million for the next phase of expansion in India.
The Cisco Networking Academy in India is one of the largest programmes for the company worldwide.
Across 198 academies nationwide, around 100,000 Indian students have been trained since its inception.
The skill-development programme is a cloud-delivered, scalable, high-quality programme that helps students learn how to design, build, secure and maintain computer networks. With this programme, Cisco hopes to train an additional 120,000 students.
Cisco also announced a $40 million investment towards the expansion of its India facility. Spread over 4 million sq. ft, and designed as a campus-as-a-city for thousands of Cisco employees, the Cisco Smart City in Bengaluru is a spectacular showcase of the future of smart and connected communities in India.
Cisco also plans to use its global supply chain expertise to help build and accelerate the manufacturing ecosystem in India but is waiting for the government to smoothen the “ease of doing business, and regulatory environment” that will make it conducive to do so, Chambers said. “We can start full-scale manufacturing around the business we have in India within two quarters of the government clearing the roadblocks,” he asserted.
In contrast, Cisco plans to invest more than $10 billion in China over the next few years. Chambers said the investment in China is higher because “we have been manufacturing in China for the last 20 years”.
Cisco, meanwhile, is also excited about the start-up ecosystem in India.
The company has made “over 25 direct and indirect investments” in the country and it is “collaborating with entrepreneurs across India to discover and accelerate the creation and adoption of disruptive technologies as well as new business models around IoE (Internet of Everything)”, Robbins said.
The central government’s department of electronics and information technology (DeitY) released the first IoT (Internet of Things) policy framework proposal for India, in October.
This policy document related to the IoT framework is part of the broader Digital India vision shared by the central government. The government envisions creating a market of $15 billion around IoT by 2020 in India, increasing connected devices from the current 200 million to 2.7 billion by 2020.
By then, it is expected that India would have a share of 5-6% of the global IoT industry.
Cisco has grown primarily by acquiring over 170 firms—most of them in the US and some in Europe and China.
In 2007, Cisco announced a $100 million venture capital fund for early-stage Indian firms. This was in addition to the $100 million it had allocated to funds focused on India—part of its $1.1 billion overall investment plan for the country.
Cisco has invested in Netmagic Solutions Ltd, Servion Global Solutions Ltd, Nimbus Communications Ltd, Satyam Global Lifenet, Indiagames Ltd and Bharti Telesoft Ltd.
In July 2010, India’s largest telcom firm, Bharti Airtel Ltd, announced a tie-up with Cisco and Servion to enter hosted contact centre services—which enable firms to access technology without having to buy software licences.
Cisco employs around 11,000 people in India across cities including Bengaluru, Delhi-NCR (national capital region), Mumbai, Chennai, Kolkata, Pune and Hyderabad. Of these, 8,000 people are part of the research and development (R&D) centres.
The Cisco Global Development Centre in Bengaluru is the largest such centre outside the US. Cisco Systems (India) Pvt. Ltd also has joint development centres with Wipro Ltd and Infosys Ltd in Bengaluru, HCL Technologies Ltd in Chennai and Zensar Technologies Ltd in Pune.
According to a 5 May note by research firm Forrester Inc., “Although an icon of the technology industry, his (Chambers’s) succession was inevitable. Chambers was the apostle of ‘customer experience’ about two decades before it was hip, and in numerous ways, he is a very tough act to follow... Still, the time is right to bring in a fresh approach to guide the company into a new era defined more by customer experience than simply technology superiority.”