Cisco renews its commitment to India

Spending US$1.7 billion on things like R&D and training and establishing a US$40 million seed fund are just a few of the things the networking giant is doing to cement its future in the country

The last year must have been a trying time for Cisco in India, having lost, according to this recent report by the Economic Times, four key people including India head Jeff White.

cisco campus

So, it is a little surprising to hear from the company that it is more optimistic than it has ever been on its prospects in the country, along with an admission that the company injects around $1.7 billion in investments into India annually — a staggeringly large investment for any multinational.

Of course, the Economic Times mystifyingly trumpeted this figure as a "fresh" investment by the networking major, something that hasn't been confirmed by anyone in the media or the company. But despite this potential gaffe, it doesn't take away from the inescapable fact that India remains a hotter prospect for Cisco than ever before.

For one thing, the company's India revenues apparently grew 18 percent in the June quarter, while those of rival China's actually slumped by 26 percent. The following quarter was evidently even worse for India's neighbour, with China recording a 33 percent dive compared to a 6 percent India revenue growth.

Numbers aside, an equally important source of Cisco's optimism is a newfound confidence in the new Indian government headed by Narendra Modi. "I think Modi in India is going to turn around that country," chairman and CEO John Chambers is reported to have remarked during an August earnings call. "You can see the enthusiasm both citizens and businesses there are betting on a single emerging market. I would bet on India right now in a big way," he said. Chambers is expecting India's contribution to worldwide company revenues to rise from 2 percent to 5 percent in the near future.

cisco chambers
Cisco's long-time chairman and CEO John Chambers is extremely bullish on India.

Another reason for Chambers' gung-ho attitude towards India has to do with the country's aspirations in the digital realm, something that Cisco hopes to become a major player in by wiring India's smart cities of the future. According to the Economic Times, the company is working closely with the government in developing and building four of the five smart cities that are being planned along the Delhi Mumbai Industrial Corridor — namely, Dholera in Gujarat, Shendra Bidkin in Maharashtra, Manesar Bawal in Haryana, and Khushkhera Bhiwadi Neemrana in Rajasthan.

Another big bet: Healthcare and Education will be an integral part of the country's digital drive, and Cisco is accordingly carving out a whole new division called the Growth Vertical, which will focus on these areas in addition to smart cities and the National Broadband Project (which is an ambitious plan is to wire each of India's 593,731 inhabited villages).

Succeeding here, the company thinks, means driving local innovation to cater to local demands. "We are going to launch a fully made-in-India product that will be used for India and shipped globally as well. This will be from one of our main product lines," Cisco's India president for Sales Dinesh Malkani told the Economic Times. First on its list has been a digitally enhanced kiosk for Bangalore's police force that can help local citizens access services. Similarly, education and healthcare kiosks are also being devised to assist in remote services delivery.

In some senses, all of this may have been a long time coming, considering Cisco's long engagement in India. It started with a $1 billion investment in 2005, and then the building of a Globalisation Centre in Bangalore in 2007, which became the company's second-largest corporate office outside its US headquarters, staffed by over 11,000 people.

Recently, Cisco announced the launch of a $40 million seed-stage fund under its "India Innovation" theme, which will pick companies that are entrenched in hot, new technology areas such as the Internet of Things (IoT), connected mobility, and big data and analytics. Some of its recent picks are Mumbai-based Covacsis Technologies, an enterprise software firm, and Mobstac, a cloud-based company that offers a publishing platform for mobile websites and apps.