US network and equipment maker Cisco is betting big on India. As part of its plan to become the No. 1 enterprise IT services company in three years, Cisco is investing heavily on its research and development (R&D) unit in Bangalore, which it calls the “hub of global operations”, out of which 70% of its products are developed and tested.
Currently, Nokia is the No.1 vendor in India’s telecom equipment market which clocked sales of Rs 1.14 lakh crore in 2012, while Cisco’s global competitors are IBM and Oracle.
Cisco, which in January sold off its home networking business to US-based wireless networking firm Belkin, believes that India’s emerging telecom and broadband revolution will be key to its transition as an enterprise and end-to-end IT services company.
“While Cisco India’s growth was around 37% in FY13, 10% of Indian telecom service providers revenues came from data last year, and 60% of that data network deployment was on Cisco’s network,” said Dinesh Malkani (pictured, right), vice-president, sales, Cisco India & SAARC.
Globally, 35% of Cisco’s revenues last year came from telecom service providers. To be sure, India was a key contributor.
“The telecom service provider industry is ripe for change, with the top three operators having secured 99% of the revenue market share. The opportunity that Cisco sees here is the technology shift from telecom equipment manufacturer (TEM) to IP (intellectual property), and from voice to data,” Malkani added.
“Apart from a venture capital infusion of $220 million in India, we have invested around $200 billion in our R&D hub in Bangalore for equipment (out of $5.8 billion globally), and 50% of our global hardware team is in Bangalore, out of the total 11,800 employees in India.
“In addition, 22% of our overall revenues are from emerging markets, with India being central to our emerging markets strategy,” said Jeff White (pictured, left), president, India & SAARC, Cisco Systems, at the first Cisco India Summit in Bangalore last week.
According to Malkani, Cisco is also using its recent acquisitions to aid Indian telecom companies (telcos) in solving issues with call drops – and in some cases, telcos have witnessed almost a 30% decrease in call drops after deploying Cisco’s solutions.
Service provider or SP wi-fi is another area of interest for telcos, as it is a solution that helps to seamlessly integrate 3G and wi-fi – which will be very useful in the future for video streaming.
Apart from this, Cisco is also working with several India telcos to aid in their upcoming 4G deployment.
Again, in terms of IT, the top 10 IT-enabled services or ITeS customers in India run on Cisco systems, and in IT services, the transition for Cisco from a systems integrator to a service provider with emphasis on SMAC (social, mobility, analytics and cloud) and non-linear business models.
“Two other major projects are cable digitisation and the national broadband roll-out, where Cisco is working closely with the Indian government to enable the same,” added White.
“So far, 150 million Indian customers are using Cisco and NDS’s direct-to-home solutions, and in time we believe these customers will convert into broadband customers,” said Malkani. In addition, $13-14 billion of Cisco’s revenues in India come from routers and switches.
Speaking about how mobility, cloud and the Internet of Everything (IoE), will be the three main focus areas for Cisco, White said, “While globally, we have grown from 1,000 devices in 1984 to 50 billion devices in 2013, moving from a web-based to an app-based economy, the potential of IoE in India is $18 billion, with potential to grow corporate profits by 21% by 2022.”
In keeping with this, Cisco is building on its existing network of 8,200 partners in India by expanding into Tier II and III cities, where the main telecom and broadband revolution is emerging.
Cisco is also upping its hiring in the public sector, banking, financial services and insurance.