Digitisation across sectors to drive growth in 2024; manufacturing unit to go live later this year: Cisco India President 

Daisy Chittilapilly- President- Cisco India & SAARC

Networking major Cisco said that its telecom service provider business will see muted growth in 2024 as the pace of the 5G rollout is slowing down in India. The company, however, expects digitisation across sectors to drive growth this year.

In an interview with Moneycontrol, Daisy Chittilapilly, President of Cisco India & SAARC, said that the company has started discussions with Indian telcos on the 5G monetisation front. She added that Cisco's new manufacturing facility on the outskirts of Chennai will go live in the latter half of this year and will be able to generate $1 billion in domestic production and exports in the short term. Edited excerpts:

How was Cisco's performance in India last year?

What we see in India with our business is just a mirror of the Indian growth story that everybody is talking about. Last year was a very good year for us. India was one of the top growth countries for Cisco worldwide. The growth was also very democratic between all of our sectors. We are present in most of the primary sectors like telecom service providers, government, financial services, manufacturing and small and medium businesses (SMBs). They all are large adopters of technology. So, we did see the velocity of growth in all of the segments, democratically. It was also a departure from pre-Covid times when some sectors were bigger contributors to our growth and sustenance in the country than others were.

What we see right now is rapid digitisation across all sectors and we have been a beneficiary of that rapid digitisation and growth. I don't think the future looks any different. I think the latest forecast for this year is about double-digit growth for the tech industry in the country. So, I think that not only was the past pretty good in terms of performance but the opportunity for the future also looks very bright in India.

Which verticals grew faster than the others and why?

The 5G adoption in India has led to growth in the service provider segment in the 12-18 months. So the service provider business has seen a lot of growth.

We do see a lot of growth come from the citizen services projects space that the government is focusing on. The government itself is building a lot of core infrastructure and digitisation in every segment. We are also seeing growth in both customer experience as well as employee experience initiatives. The fourth pillar of growth and then the most important one is the de-risking of cyber concerns that everybody has in this country. This piece has also extended to social sectors, like healthcare and education which is all about spending on cyber.

There is also the conversation around AI. There are two parts to the AI conversation which are AI capabilities in our technologies and what they can do for the digital initiatives of our customers, partners and stakeholders. There's also the other conversation around security for AI models and AI initiatives which enterprises and institutions want to roll out.

Lastly, the cloud solutions business. Cloud is a continuing conversation because we all live in a hybrid world and part of enabling that hybrid world is the ability for enterprises and institutions to provide on-premises, in the cloud, in hosted data centres capabilities.

How do you look at the Gen-AI opportunity?

Gen-AI calls for a whole new kind of infrastructure itself. So, we're also innovating on that front to help customers build AI workload-ready infrastructure, and that is where a lot of our R&D dollars are going at this point. We are already using AI for network solutions to monitor and manage very large-scale networks.

Our WebEx has used AI quite distinctively. It combines real-time media models with large language models. It can count the number of people in a conference room and it can check for facial emotional sensitivities. So, it's intended to make the work of the hybrid-work worker far more inclusive. We also use Gen-AI assistants in our firewalls.

Indian telcos have started focusing on 5G monetisation. Are you also involved in the monetisation talks, especially around use cases?

One of our core businesses is the connectivity space. We have been partners with service providers for some time now. Now as a part of that conversation, we are also defining use cases which will help them monetise. We've always been working with them to define use cases which will help monetise their network and 5G is the newest frame of reference for that effort.

We recently showcased use cases like connected ambulances with Airtel. So, wherever the idea is a little bit newer and needs to be tested and wherever it is a conversation about building managed services and frameworks of reference, that is done as a part of our overall go-to-market and partnership work that we do with the telecom operators.

Indian telcos have rolled out 5G to a large extent. Do you expect the growth to continue there?

We do see some muted growth. And that is related to the cyclic nature of that business. When India and the service providers decided to invest in 5G was also at the height of our supply chain crisis. So, there was a lot of sourcing in advance to be able to make sure that their rollouts were not impacted, and we are still sitting on inventories that need to be rolled out for our top two clients in the country.

There are certainly more than green shoots in many spaces in India. But in the other segments, I am very happy to say that we will see growth in India. And I would suspect that is not different for Cisco versus a lot of our peers in the country as well.

Cisco in February announced layoffs globally. Is India being impacted?

We don't comment on the location-wise impact. If you look at our overall conversation, it is a resizing based on where we are going as a company, and how we are innovating to make the technologies and spaces to manage what our customers expect of us. I don't think we are alone in this in the technology space. There is this time-to-time rejigging from who we are as a company, to where we want to go, and therefore a people rotation movement is in and out of it.

We are the second largest setup for India outside the US, and we do have opportunities for our people to move into newer areas. And that's been our attempt through this restructuring conversation as well.

What is the update on Cisco's manufacturing facility?

We do expect it to go live in the latter half of this year. The facility will focus on networking and data centre products in the first phase. This is going to be a ramp-up over a period of time.

Have you identified the countries you're going to serve through this facility?

So, our supply chain is globally diversified. When we say this will be an export node, then it will go where the demand for that product is. So, it's not like we will say, from here, we will serve only these countries. Cisco's supply chain is distributed, and all nodes serve any part where the demand comes from. So, wherever is the optimum way to serve it, that's how it is. It's not defined on fixed geographies.

Cisco is targeting over $1 billion in combined exports and domestic production from this facility. In how many years, do you intend to achieve this?

It's an outcome of demand. We do not expect it to be a long-term plan for sure. Because there are economics which govern break-evens on investments like this. In a couple of years, we have to stand this up as a successful node.

We have consolidated our facility with Jabil in Pune into this new facility. Jabil is one of our contractors worldwide but not in India at this point in time.

A lot of consolidation has taken place in the last two years in the networking space globally. Do you think that this consolidation will continue?

Sometimes you're not able to make sense of what spurs or what creates these mergers and acquisitions as well, because in both the examples VMware-Broadcom and HPE-Juniper, we have to see how this will pan out in terms of what the combined will bring incrementally in terms of the advantage to the market.

It will only be clear once we start to see the impact of these acquisitions and the way that the markets and the customers are served. Frankly, that is not what anchors what we do or how we operate. Our focus is very much tied to our strategy and execution of it and the way we help define and respond to what customers want.

Is consolidation expected in cyberspace?

We do think a significant consolidation will happen in cyberspace because for many years now Cisco has been saying that this is an untenable conversation. The universe of security players is anywhere from 50 to 70 players minimum in any enterprise, some have lost track of how many players they've got. Using all these people has only led to chaos and confusion for customers...their risk profile has not been derisked because of this. They are finding it difficult to hire capable people who can keep all of this technology current and running. So, we are seeing, and customers have started to voice this as well.

There is a need to consolidate and so we think in this universe of 3,500 security players, which is growing at a considerable clip, perhaps there is some consolidation opportunity there which will be driven more by a customer's intent to consolidate and reduce their risk.

How has been the competition for Cisco lately?

We do see a lot of players entering India opportunistically because there is muted growth or no growth in many parts of the world. That is certainly a trend that we are seeing, because typically when a company starts up 5-10 years ago, they have a kind of rollout in which they expand their global operations. But we are seeing that because of the tremendous opportunity in India, they are arriving here as part of their first stage of global expansion outside of their country of origin. So, we do see that happening.

It's good for the tech ecosystem because every player tends to broaden out and shape the market. There will be more choices in the market. But our portfolio has been so broad. At Cisco, we are used to having a different set of competitors in each part of the portfolio that we carry. So, we're kind of used to this, but the only observation I would make is yes, we are seeing it in India, because of the opportunity in India becoming the stage one expansion plan for a lot of newer companies.

The more the merrier. It is good for us and also keeps us on our toes. Discomfort is very essential for growth and success. Any new entrant is always welcome and it's good for the ecosystem as it will help mature the ecosystem in the country. In India, it is very important to have access to the best technology at all times. India has always been a very cost-conscious country.