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