Cisco India: Attempting to double revenues

Despite facing stiff competition from its Chinese counterparts, Cisco Systems India managed to clock a 9% growth in FY15. Its turnover for the fiscal stood at Rs 9,740 crore as against Rs 8,902 crore in FY14. The company has a strong focus on India and is looking at ways to increase its presence in the country. However, it has not been able to double its India business, which it has been aiming for the last few years.

Despite 9% growth, the company is struggling to increase its sales presence in the country. While the company is endeavoring to increase its presence in the enterprise segment for its networking and datacenter solutions, it is in the process to identify a clear growth trajectory in the country.

India is Cisco Systems’ second global headquarter and accounts for 30% of its overall talent base. The company’s current headcount stands at 10,200. According to Cisco’s CEO John T Chambers, the company is investing close to $1.7 bn in India annually. Cisco has realized the growth potential in India, given Modi government’s push on ‘Digital India’ and ‘Make in India’. Last year, the government was in the planning phase, hence it did not result into any business for Cisco India. However, it now hopes to gain from various government projects that will have a great impact on its revenues. Chambers had earlier hoped to take India revenues to 5% of the global revenues. However, his expectations have not even reached half way as India contributes meagre 2% to its global revenues. Cisco is now hoping to reap on the growing demand for cloud and networking solutions in India. The company has also announced new local strategic initiatives, including the move to enable manufacturing in India to support the Digital India vision. It has announced plans for direct and indirect investment of up to $20 mn over the next five years into the Cisco Networking Academy, with additional $40 mn for the next phase of expansion in India.

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Apart from Cisco’s traditional networking portfolio, Cisco rapidly grew its server business. Its UCS range of servers has fast taken on the competition who are losing their market share in the server space. Overall, the company is trying to diversify its business from the switching and router space as it sees opportunities in new areas such as cloud, mobility, IoT, and big data. Cisco eyes great opportunity in India’s focus on building 100 smart cities. The company closed four deals last year for four smart city projects such as Navi Mumbai, Pune, Jaipur, and Lucknow. While Cisco is providing the networking infrastructure for the projects, it is working with partners which will provide different solutions such as smart street lighting, traffic management systems, CCTV security surveillance systems, and water management systems.

The company is putting a lot of emphasis on its own version of IoT which it calls the Internet of Everything. It has successfully created the buzz for this trend but has not yet seen any uptake as IoT is only a part of the boardroom discussions. Cisco Systems India has been seeing frequent changes in the top leadership in the last few years. FY15 saw Jeff White, Cisco’s President and Country Manager for India and Saarc region moving out of the company. White had moved to India in January 2013 replacing Naresh Wadhwa, who had spent almost 15 years in Cisco. Later, Dinesh Malkani replaced White who began to oversee Cisco’s business in the region. The main area Cisco needs to address is the fierce competition it faces from its Chinese counterparts which are offering solutions at much lower prices to its traditional strongholds— telecom operators. Cisco has to identify new revenue streams in India and expand its network to tap market opportunities in the government and large enterprise segments. Besides, the company needs to create a business strategy to rope in mid-size enterprises which are afraid of doing business with Cisco as they consider it a premium brand. If it is able to move beyond its traditional image, Cisco is set to grow and increase its customer base in the country.

 

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