India is critical to us for innovation

Written by Shruti Ambavat | MG Arun | Updated: Feb 13 2012, 06:26am hrs
Cisco Systems, which designs and sells networks and communications technology, undertook a business rejig a year ago, shutting down underperforming units including its Flip video camera business, trimming its structure of internal boards and councils, and aiming to remove $1 billion in expenses. The company has now sharpened its focus on five core areasborder-less networks and services, collaboration, visualisation and datacentre, business architecture, and video. It also plans to connect emerging markets with the developed ones with its innovative and cost-effective products, and believes that India can offer a whole new range of products at different price points. Edzard Overbeek, Ciscos Asia Pacific and Japan president , spoke to Shruti Ambavat and MG Arun on the restructuring, and Indias contributions as a major innovation hub for the company. Excerpts:

What has been the progress of the restructuring exercise at Cisco so far

Close to a year ago, we took a decision to restructure the company, a hard decision for the top management, but for the better. In around 20 days, we had a clear plan of what we needed to do and where we should focus on. We are now focusing on our five core areasborder-less networks and services, collaboration, visualisation and datacentre, business architecture, and video. We have now started to move from independent development cycles to one platform, that will comprise the operating system and network software. What we also did is to let go of some of the businesses like our Flip cameras unit.

Why have you narrowed in on these five areas How do you see video growing

Collaborative tools are a success for us because many people these days are using social networks and forming online communities. Social media has also become a key differentiator in business. To reduce costs, firms are using collaborative technologies by interconnecting on a global scale. Under collaboration, video forms the next layer of business and a tool for consumer interaction. Recent studies have shown that about 50% of the network traffic is from video and in three years, by 2014, it will be 90%. The latency, which is the speed at which networks operate, is very different in the video perspective than from an email one.

We are also focusing on datacentres, as it is the core piece of any IT company. We entered the space two years ago, and are now earning $1 billion revenues out of the datacentre business. Productivity, utilisation and visualisation of those servers are critical for customers going forward and we come in at a time when cost optimisation is spoken about everywhere. Through business architecture, we also work on integrating software and hardware, which leads to cost efficiencies.

Which are the business segments where you see growing demand for these products

There is a lot of product innovation in financial services, manufacturing and the pharmaceutical industry on the supply chain side. In the packaged goods side, some major consumer brands like shampoo companies are using video interaction to get feedback from customers whether they liked the smell or the texture of the product, and so on. Under healthcare, we are working on a pilot project with Chennai-based Apollo Hospitals, where a technology is being innovated to diagnose patients in rural areas and treat them by city doctors using web-based technology.

How important is India to Cisco from a global perspective

We consider India as the companys second global headquarters. We came to India in 1995, making it a strategic market for us. Our India centre currently houses 8,000 employees. Cisco makes products in India for other emerging markets like Vietnam and the Philippines at different price points. The company is currently working on an entry-level communications solution named BE 3000 for small and mid-sized businesses, and a router or networking device named ASR 901 that aids smartphones and tablets. The company is also modifying a set-top box made by a Chinese firm DVN to be marketed in India and later other markets at affordable prices. So, what Cisco is really looking at is to connect all the emerging markets through these inter-trade of products. We have witnessed 30% growth in India last year, which means that the strategic decision we took years ago, is paying off.

What are the challenges in India for Cisco at present

While we are working on remote diagnosis and prescription of medicines for patients in the rural areas, there is no law supporting this move. Moreover, the overall sentiment in the business is not as bullish as it was two quarters ago. We can see the impact of policy paralysis and government indecision. But the biggest impact is from the public sector, where spending has clearly slowed down.