Cisco chief expects the India business to contribute as much as ten percent of the company's total revenues in the next few years.
On his first visit to India after taking over as the CEO of Cisco, Chuck Robbins has said that the American tech firm sees a huge growth potential in India. The Cisco chief expects the India business to contribute as much as 10 percent of the company's total revenues in the next few years.
“I think India should get 10 percent our revenues in the next few years and then we will see where we go from there,” said Robbins.
He said: “There are some unique requirements based on what they are trying to achieve, and the things that we have introduced is a notion of co-innovation and co-development with some of our larger customers. It really understands what is it they really need that is unique because using what we find after we dig into it isn’t unique. But they are leading in around for the certain area so we have done some development here in India.”
Below is the verbatim transcript of Chuck Robbins’s interview to Ronojoy Banerjee on CNBC-TV18.
Q: Since this is your first television interview here in India as the CEO, allow me to take you back to May 2015 when you were appointed as the new CEO, Cisco taking over from John Chambers, 18 months ago. I remember John in one of his initial press conferences called you the execution man, he is somebody who could translate plans into real action and you have been executing a lot of this major transformation, the first of its kind in its 30 year old history. Talk to us a little bit about it, how has the journey been so far?
A: It is a pleasure to be here. It has been a great week here in India; we will talk about that. However, the last 18 months have been fascinating and as you know, the technology landscape is changing just so rapidly. The great news for all of us in technology is that technology becoming more important to our customers, technology is actually becoming the heart of how companies and countries define their strategy in the future as oppose to just it is sort of how we enable our strategy. It has become part of the strategy.
What that means is that our customer expectations are changing so rapidly, the role that we are playing is continuing to evolve and how our customers want to consume the technology is changing. What I mean by that is they fundamentally need to get to whatever business outcome they are trying to get to more quickly and that requires us to move more quickly, it requires us to think about how we package our solutions differently so this is sort of why customers want to buy from the cloud or buy as a service because it allows them to get that benefit more affectively. So, all of that and also the geopolitical dynamics, economic dynamics, all of those things just require us to move at a pace that we have never moved before.
Q: Talk to us a little bit about India because this is your first visit in India as a CEO and you have announced India will be the 12th country where you will be setting up the manufacturing operations. What does it mean for Cisco in India for you to make that sort of announcement?
A: India is just such an incredibly exciting place and it is incredibly important country for Cisco. If you go back to 1995, that is when we first came in to India, and then almost a decade ago we made a decision that this would be our second world global headquarters. Now, we employee just under 11,000 employees here, we have built a massive ecosystem in India with 3,000 partners, great interaction with many of the global systems integrators and then 15 months ago we met with prime minister Modi and understood his vision for digital India and at the time, sort of the second big thing we have done in India was we made a commitment to really align and invest to help achieve that vision and to participate very directly in this amazing journey that is going on here.
In this week, the third major thing which was actually one of the priorities that the prime minister laid out, but it also was just something that makes good business sense for us, we announced manufacturing here in India as part of the Make In India campaign. So, the way I think about India for Cisco is that we do have a 360 degree relationship here. It is not just a country we sell technology, it is also an area where we do deep R&D, we do deep innovation, every function of our company is actually represented here in India. Out IT organisation, our legal organisation, our sales organisation, our services organisation and now you have this ability to go through the early innovation cycle, drive the development of the technology and we could take it all the way through to the supply chain and not that mention that our business here has been really good. So, our local team has done such a good job that India was selected as the country of the year for Cisco in our last fiscal year.
Q: In fact India has been coming up in your conference calls also for the last I think nine quarters.
A: We have a lot of pressure on Dinesh Malkani, our local leader here. I told him that he needed to be country of the year for the next decade.
Q: Talking about numbers, just allow me to sort of let my viewers also know how India has performed. In the quarter ending July, the India revenues grew 20 percent whereas in some of the other big markets, China declined 12 percent, emerging markets overall fell 6 percent. What is happening, what is Dinesh telling you, why is and mind you, this growth in India revenues is not on low base effect, the base is already quite high so what is happening?
A: Dinesh tells me it is just absolute phenomenal leadership on his part. I think there is a combination, first of all I am joking but we do have a world class team here and they are doing an amazing job. However, also the country has a very clear plan and around the world there are several leaders who understand truly that technology has to be a key element of how they move their country forward and it has been fascinating even over the last 15 months to just see how the vision that prime minister Modi laid out and frankly the vision that many of the state leaders have as well, how consistently the technology is now being leveraged to achieve these missions.
So, the issues around just driving gross domestic product (GDP) growth, looking at smart cities to help deal with urbansation that is going to be occurring here, the education and the commitment to skilling students around technology.
Q: You see technology becoming a sort of a central piece in policymaking now? It is not a periphery anymore?
A: It seems to be core. It is the core and there is probably three things that are going on. Number one, we do have a great team here, so, I don’t want to underestimate that and we believe in India and have invested here for long time. Secondly, technology has been the find as a key element of the fundamental strategy of this country going forward and I think that our commitment and investments and alignments around those initiatives have helped us create a partnership with the country that we certainly appreciate and I think that all those things including the great GDP growth for a country that size is certainly helping as well.
Q: Let us talk about specific also because Cisco as again as I said is in the middle of this massive churn and globally you are focussing on security, IOT, collaboration and cloud services. Specifically when it comes to India which are the two or three key areas of focus for you?
A: In India first of all when you think about Digital India it actually expands our portfolio and so the great thing about our success that we have seen here is that it has been comprehensively across the breadth of our business. So, if you look at digitisation you have to have fundamental core connectivity with routing and switching platforms which are the products we announced that we would initially manufacture here some of our most complex products. But also the IOT, innovation is going to happen here, the smart cities work. We are really excited about some of the innovation centres that we have opened and our venture capital investment here, seeing the entrepreneurial start ups around IOT and other areas is just going to be very exciting.
If you look at how citizen services will be delivered in the future those will be delivered over video so that plays into our collaboration portfolio. And clearly one of the biggest things that we have to work on together is securities. So, it is a broad based opportunity for us and our teams have done a good job of working on them.
Q: Has your team given you an estimate on how large the business potential of India market could be in the coming 5-10 years?
A: No, but I have given them an estimate of what it needs to be in the next 5-10 years.
Q: Then give us a sense of how much that will be?
A: I don't see any reason why we can't continue the growth rates that we are seeing. This country is on the front end of explosive growth. The gross domestic product (GDP) we are seeing today, the broadband build out, the enablement and I believe the work that is going on to lift people into the middle class here, the urbanisation of people and the job creation that needs to occur and will occur there is no reason we can't continue this growth rate for the foreseeable future.
Q: Talk to me also a little bit about the announcement that you recently made with Government of Maharashtra where you will also be helping Nagpur come up with smart city solutions. How did that come about and what are the areas where you think you will be able to continue?
A: The key thing that we try to do when go into - when I am talking to another CEO or when we are talking to leaders of states or countries we really need to understand what it is they are trying to accomplish. Because the technology is critically important and everyone cares deeply about this technology but only in the context of how it helps them to achieve the mission. So, first and foremost you really need to listen and understand what it is you are trying to do. So, the chief minister obviously is focussed on broadband connectivity for everyone in the state. The connectivity of everyone in the state. Working on smart city initiatives to try to lead across India and these are the examples not only for India frankly but for the world.
So, we are working on all of those initiatives as well as doing some pilots around. Video connectivity into schools and poverty stricken areas and seeing how we can help lift some of those children and give them an opportunity. So, we are excited about the opportunity as well as we are going to drive the manufacturing there. We are going to open 25 Cisco network academies there in the next 12 months. Educating 10,000 students over the next couple of years. So, it is a very broad based relationship and partnership.
Q: Do we see the India unit, the manufacturing unit also becoming some sort of a regional hub here for exports?
A: Yes, our long term plan would be that we would like to see that we want to start and make sure that everything go on properly and overtime then we can look at how do we expand the portfolio that we offer through manufacturing here in India and then also we can look at how we can serve other parts of the world. So, we will look at those over time for sure.
Q: Are you seeing that traditionally since you have been to India in the past and are you seeing that perhaps in the past policy makers had a very ambivalent attitude towards technology and now they are shedding their ambivalence and they are becoming far more open in embracing technology. Is that the big change you have seen since your last visit to India vis-à-vis today?
A: The last 15 months has been amazing. When I came this week it has just been fascinating and I have seen exactly what you just described and what we see is when technology really becomes part of the fabric of how a company or a country thinks about it, it always starts at the top. When we make a decision to enter into transformational partnership and really decide that we are going to put Cisco assets and we are going to make investments we only do that. When the leader of the given organisation or the country or the state when they see it and they align to it and they sponsor it and they believe in it then that is when we think we can absolutely A: we can be successful but also one of the key tenets of our culture is we want to change the world and when we have the opportunity to obviously drive great business result and also do great things in the world that is what we want to do and I don't think there is another place on the planet right now where that is possible like it is in India.
Q: So, how big do you see India market becoming and how much do you think India will contribute to your overall revenues in the coming few years?
A: India should get to 10 percent of our revenues in the next few years and then we will see where we will go from there.
Q: Just like Cisco, Ericsson is also trying to sort of focus now on services and move away -- not move away but at least focus reduce its focus on hardware now, get into software. Is there any learning for Cisco from whatever we have seen with Ericsson?
A: First of all I think that software is critically important and just so we are clear like 80-85 percent of the engineers inside of Cisco are software engineers and so we have sold our product as an integrated system over the years but the need for high performance hardware is not going to go away. I think that it is critically important to use software where we can because it gives you speed and agility and to the extent a problem can be solved with software, we should solve it with software to the extent that it needs high performance hardware, we will continue to do both. There is a pretty large internet out there that runs every day on high performance hardware and the traffic is increasing so I think that is going to continue to be a requirement.
I see examples every week where we have customers who have challenges because the hardware is not high power enough to do what they are trying to do. So, I don’t think that is going away. However, I do think that when you can solve a problem for a customer or create an opportunity for customer using software, it just allows you to move faster. So, we should; we will have that balance in how we make those transitions. It is good for us and we love the software model as well so we are working to the transition. The key thing always on this one is just stay close to what your customer is trying to accomplish. Don’t get married to the technology.
Q: Since company like Cisco, you are at the forefront of technological innovation. I want to draw you to the larger conversation that is panning out in terms of will just the way horse was replaced by the car, similarly will man now be replaced by a robot. So, this whole large debate about automation versus jobs, is that a serious threat, artificial intelligence, 3D printing, the kind of innovation that we have seen, is that a real threat when it comes to largescale job creation like we have seen in the past?
A: I think this is an interesting topic. There are a lot of varying opinions all around the world. I think that history would tell us that man is kind of resilient and as these transitions occur that we create new jobs and people become educated and able to do those jobs. It is not to say that some people are impacted by those transitions regardless of whether you go back to your example of the horse to car manufacturing transitions. Many of the transitions that have occurred in the past, the way I think about -- I will talk about global basis and then particularly in India, I think that we just need to thoughtful because the technology transitions that are going to occur over the next decade are going to occur across every industry at the same time and I am not sure history would suggest we have seen it happen so broadly.
So I do think we need to be thoughtful about it and I think that we as a technology industry and as leaders around the world, we need to be focused on making sure we are doing what we can to enable those folks who may be displaced by technology to be re-skilled into other roles and we are actively involved there. We have announced 250,000 students to be trained here in next three years.
Q: What you essentially think that this is going to happen across industries and this is what is the big change today as compared to in the past, because in the past this change, this creative destruction would take place in one sector and where displaced workers would be absolved by some other industry but the change today is that every industry is going through this phase of creative destruction so therefore there may not be an industry to absorb the displaced workers is that what you are saying?
A: I don’t necessarily think that every transition is going to result in displaced workers. I think every job will change based on technology but it doesn’t mean every job will be displaced. However, I think that it is definitely something that we all need to care about on a global basis and make sure we truly understand and that we can take action in a timely manner. However, I think there will be tonnes of job creation as a result of this as well. There is so much opportunity, you think about what has happened over the last few years and the focus on analytics and big data, data scientist and all these new jobs are being created and so I don’t think it is definitely not a problem, I just think as an industry and as leaders in the industry, we need to stay on top of it.
Now, for India my opinion, all of the technology and all of broadband connectivity and all the work that is being done here, I think it is just going to create more and more opportunities for people in India because a) you have such an incredibly educated engineering oriented workforce here. I think there is obviously the challenge of creating so many jobs but as we bring the technology here, I think it will be more natural thing that occurs.
Q: Therefore you also sense that many of the skill sets that are relevant today may become obsolete tomorrow because just in 2016 alone companies like Intel, Dell, Microsoft, Cisco, Ericsson have laid off so many people, over 70,000 people have been let go in the first six months of this year. So, is that the big challenge now in terms of really trying to train -- for employees to actually keep re-skilling themselves to stay relevant?
A: First of all, these are never easy decisions because they impact people. However, in our case as an example, we had so many areas that we needed to shift our investments towards for the future relative to IOT, and cloud and security and these areas, some of those are incredibly unique skill sets that we just needed to go higher so we had to make some of these moves.
In the future every company will continue and we do this today and we are going to be more aggressive going forward in ensuring that we have programs in place to give people the opportunity to be reeducated towards some of these higher growth areas and I think that is indicative of what is going to happen on a global basis and we have to be really good at giving those who can make that transition the opportunity and then for those who can’t giving them the opportunity to find work in other areas and I think that is what is going to happen over the next few years.
Q: In conclusion then, geopolitics, how are you seeing it? Has that now become one of the key risk factors for a globalised business like yours, we are also seeing increasingly this anti-trade rhetoric that is becoming pretty much ubiquitous around the world, what is your sense?
A: As we think about the factors that are creating such a dynamic environment for us, you have got the economic shifts that occur pretty regularly, the geopolitical dynamic is obviously very interesting these days. The technology transitions are significant the customer expectations are changing pretty rapidly so we balance all of those. As I think about the political dynamics around the world right now, I don’t think no business leader believes that the world is better off if we operate independently as countries.
This whole notion of operating as a global economy is something that is required for us to be successful as all countries to be successful. So, we believe in it deeply. The announcement we have made here this week, we believe that operating at global scale is going to continue to be required and I think some of the issues that exist around the world right now in different countries and how people are feeling is real and we need to make sure we are dealing those. However, those of us in business believe that having healthy global inter-dependent economic environment is actually a requirement to solve some of the other problems that exist.