JOHN CHAMBERS: Mr Internet’s HR Mission

If Bill Gates is a successful market maker in the software arena, Cisco chief
John Chambers is perhaps the smartest salesman the networking industry has ever
seen. A visionary in his own right, Chambers’ impact on the emerging Internet
era has earned him star status–his recent visit to India gave a glimpse of
that. Representatives from the industry or the government, the old economy or
the new, all were eager to grab a bite of gyan from this Internet guru.

Called "Mr Internet" by some and credited with making Cisco the
most valuable company, Chambers’ business acumen has already been proven. The
man who took over as Cisco’s CEO in 1995, is credited with successfully
steering its growth from a market cap of $9 billion to $480 billion. The company
has already established a significant presence in Asian countries such as Japan,
Korea and China and now seems to be drawn to India. His visit not only
establishes India as a key player in the Internet economy, but also indicates
Cisco’s growing interest in the region. Whether that means an inflow of more
investment or more jobs for the software professionals here, the country has a
lot to gain. "We are expanding our presence in India to take advantage of
the R&D talent and to demonstrate our commitment to this government and its
people," says Chambers.

India a likely winner

At present, India’s contribution to Cisco’s business is only about
one-third of a percent, an insignificant amount by any standards. Out of Cisco’s
global revenues of $18.9 billion, India’s share is only $50 million. But
Chambers points out that even China was in a similar position about three years
ago and today it contributes 5%. He sees a lot of potential in India and expects
the number of Internet users in the country to grow faster than most other Asian
countries, to about 50 million by 2004. "This is a period when India can
skip generations and make up for the lost time. If you follow the footsteps of
others, you will lag behind. Instead of building an old telecom network, you
should go straight for building a network of the future," he advises.

Confirming Cisco’s confidence in the Indian market, Chambers has committed
an investment of $200 million towards development of networking software. The
major chunk of the investment will go in expanding Cisco’s global development
center in Bangalore and the rest will be used to promote five dedicated Cisco
development centers being run by three major Indian IT companies–Infosys
Technologies, Wipro and HCL Technologies. Cisco also projects that it will
expand its engineering workforce in India by 300% over the next three years to
meet its growth projections. The company currently employs about 500 people in
the development center in Bangalore and sales offices in New Delhi, Mumbai,
Bangalore, Chennai and Calcutta.

Chambers also believes that India can emerge as the main nation supplying
network maintenance engineers to other countries. Cisco predicts a worldwide
shortage of two million networking professionals by 2005. According to Chambers,
India is poised for an economic leap if it can develop a solid Internet
infrastructure to match its army of software engineers.

Outlining the challenges facing the country, Chambers says the first is to
increase the GNP by developing infrastructure. The second is to build an
effective corporate-government relationship. Here, the government’s
understanding of technology will go a long way. The third major challenge, he
emphasizes, is to cash in on the global trends of outsourcing of software and
services.

Internet and education: the equalizers

"The two equalizers in life are Internet and education," says
Chambers. "With infrastructure and the right education, you win." The
education system in India, according to him, is extremely strong and has the
ability to produce world-class software professionals, a fact that has brought
most multinational IT companies here to set up their development centers. About
25% of Cisco’s employees are Indians and its R&D center in India is also
among its largest in the world.

Engineers in India cost only a tenth of their US counterparts but
infrastructure costs add to overheads. For instance, hiring an Indian
professional will cost $13,000, but with the lack of infrastructure, companies
incur an additional overhead of $32,000.

Chambers firmly believes that Internet will change the way we learn by making
a significant impact on the education system. "The Internet has evolved
through two phases and we are currently on the verge of the third phase, which
is e-learning. During the first phase, Internet was leveraged for customer
support, while during the second phase enterprises experienced the fruits of a
connected environment."

Cisco’s faith in education as an equalizer has attracted an investment of
$10 million in India to set up a chain of 34 network training academies as well
as a center of excellence on data, voice and video integration. "The
networking academy program is our way of increasing the pool of qualified IT
professionals. I believe that with the strong IT skills that exist in India
today, it is possible to have over 100,000 students involved in the program in
India in five years," he says.

It is expected that by 2005, there will be a demand for about 2 million
network professionals the world over. "Cisco alone would require about
400,000—500,000 network engineers," says Chambers. The Cisco networking
academy program has about 5,900 academies in 101 countries now, with about
150,000 enrollments so far.

Effective business strategy

Cisco’s most successful business strategy has been acquisitions and
partnerships. The company religiously follows an outsourcing model and picks its
partners with great care. Describing the role of acquisitions as a key strategy
for growth, Chambers says, "We have looked at acquisitions as an insertion
point to our competencies." Therefore, Cisco’s focus will always be to
acquire companies that are building components for products of the future. The
company already has an impressive track record of 67 acquisitions.

As far as India is concerned, the company will initially concentrate on
venture funding start-ups, which are working on networking technologies to build
products of the next generation. "And if they do well, we are open to
buying them also." Explaining the Cisco approach to acquisitions, Chambers
says, "We would prefer to buy a small private company which matches our
culture rather than go for a Nortel or Nokia where there would be issues related
to cross-cultural differences."

Cisco’s speed and volume of growth has been an amazing success story that
also reflects the immense power of the Net. The company has successfully managed
90% of its customer support over the Web, which has allowed it to save $600
million over the last few years. It is now moving towards a future where design,
learning, e-commerce, management information and customer support will be
conducted over seamless networks of voice, video and data supported by
integrated software solutions. And India will be a key base, especially for
developing technologies of the future for the emerging Internet economy.

 DQ