Cisco's Grand India Ambitions

Here's the big story of the day and further proof that globalization is forcing companies to change they way they do business.

The networking-equipment maker is shifting 20% of top brass to India, in a bid to set up a global, developing-technology hub on the subcontinent. After 11 years of low-key presence Cisco is now investing $1.1 billion in India in a variety of initiatives. "This is the largest commitment outside of Silicon Valley, as India is important to our global strategy," said John Chambers, Cisco's chairman and chief executive officer.

So what is the reason for this sudden transformation? It appears that they have learnt a lesson or two from their experiences in China.

In China, homegrown rivals like Huawei and Harbour Networks have been grabbing share from Cisco. The other issue is cost. Huawei can compete against Cisco on price because of its cheap talent pool. Facing those pressures, Cisco will find it hard to maintain its high margins unless it develops its own vast force of low-cost engineering talent.

This is an excellent example of how globalization works. While it opens up vast new markets, it also makes the business extremely competetive. There is no way Cisco can compete unless it employs a model similar to its competitors. Closed-door restrictionists will only see one side of this story - Cisco is moving top jobs to India..waah waah, mommy help me!

... Cisco now wants to make India its global hub for developing technologies in routing, software, and network management. It is investing in a manufacturing facility in Chennai in south India, and has roped in global manufacturing partner Foxconn of Taiwan to help out. While Cisco will make specific voice-technology products initially for the Indian market, it will eventually use the facility as a global sourcing base to export high-tech products. To make all of this happen, Cisco is tripling its headcount in India to 6,000 in the next couple of years. The move comes at a time when India is facing a severe dearth of engineers and every big and small information-technology company is on a hiring spree.

All those who made New Year resolutions to changes jobs and move to U.S., think twice, as we will see more top companies shifting top jobs from the U.S. to compete globally.