Cisco's heavy lifting

Doing the seemingly impossible is nothing new to Wim Elfrink, the 56-year-old Chief Globalisation Officer and Executive Vice President of the $34.5-billion ($29.2 billion for the first nine months of the current fiscal) networking giant Cisco Systems. Over the last two decades and more, he has run 42 marathons, become proficient in snowboarding and skiing and even found the time to become fluent in German and Italian, besides picking up a smattering of Hindi in the last 19 months he has spent in India. All these tasks, however, pale compared to the one Elfrink has set himself at work. More than a decade after he joined Cisco and worked across the US and Europe, he has chosen to relocate to Bangalore and spearhead Cisco’s ambitious plans to make the city its second global headquarters and move up to 20 per cent of its top talent to India.

Cisco, which makes networking equipment that helps direct traffic on the Internet, has followed the rise and fall of the technology industry. A decade ago, the company opened its software unit in India and focussed on the cost leverage offered here. With demographics expected to change (the developing world now accounts for half the world’s GDP and will account for over seven billion of the world’s population by 2050, according to various estimates), Cisco is now looking to make India its second global HQ or Globalisation Centre East. “Cisco needs to harness the technology expertise available in other major regions,” says Robert Whitely, Principal Analyst and Research Director at Forrester.

Transformation in progress

“Cisco wants to be the next generation company in terms of speed and scale,” Elfrink declares when we meet him at Cisco’s swish 1-million sq. ft campus on Bangalore’s Ring Road. In almost two years that he has spent in the city, he has opened a new campus for the company and convinced at least half-a-dozen vice president-ranked executives to relocate themselves as part of this ambitious programme. He has had to walk the talk by proving that an entire business line could be managed from here. “I am in charge of Cisco’s ($6 billion or Rs 25,800 crore) services business. My biggest customers are in mature markets and I need to trust my team there to manage key accounts,” says Elfrink, who spends up to 60 per cent of his time on the road.

Being part of the globalisation team has also meant that Elfrink and his team (curiously, just three people report directly to him for this initiative, with the rest owning only dotted line responsibility) have had to alter their style of functioning to suit these emerging markets.

Second coming A decade after coming to India for cost, Cisco now sees it as a second global HQ. Here are the company’s plans: Move senior management, beginning with Wim Elfrink, to its Globalisation Centre East in Bangalore to manage the transition Have business units based and run entirely from India; these will be new entities, and not relocated from the US or Europe Address economies in a five-hour flight span from Bangalore from the globalisation centre Sell the idea of operating a second global HQ internally and look for more senior and middle managers to make the transition Change Cisco’s work culture from ‘command and conquer,’ where the US headquarters dictates strategy to one of collaboration, where senior executives are allowed to run their businesses almost autonomously Build middle management bandwidth internally to allow local employees to eventually take over entire global business units headquartered from Bangalore Have business units focus on large opportunities domestically and in proximate markets like Saudi Arabia and focus R&D efforts on developing solutions for these economies

“There isn’t such a premium on personal space in India, for example, and work is more ad hoc in developing markets compared to the rigid meetings and reviews in the West,” says Leo Scrivner, Vice President (HR) for Cisco. Elfrink has himself adjusted his workday to balance two time zones and even works 10 days straight before taking a couple of days off from work (see Global Way of Life). “I work early in the morning and late in the night from home and spend some time with my kids and come to the campus only to meet with colleagues and customers,” says Elfrink. Adjusting to this environment means getting used to not working on a Friday in West Asia, which is a weekly holiday, for example.

“You don’t need to commute to compute,” Elfrink declares.

Pieces of the puzzle

Cisco has already set up a complete business unit—Cisco Building Systems Business Unit—out of its Bangalore campus and is looking for more units to house right here. “We haven’t moved a single job or business unit out of the US or Europe; these are all incremental businesses we are opening here,” says Syed Hoda, Chief of Staff for Cisco’s globalisation initiative, who first spoke seriously on this ambitious plan with Elfrink on a flight from Frankfurt to the US. “We want to cover markets within a five-hour flight from Bangalore and that accounts for around 70 per cent of the human population,” explains Elfrink. Cisco has won admirers in the industry, academia and analysts.

According to Elfrink, over 100 companies have visited its ‘Globalisation Centre East’ (as it calls its Bangalore operations) and it has even been featured in management journals. “They have ambitious plans for India because they have had a lot of success there and see tremendous growth in the region. It is much easier for them to be based in Bangalore than in Silicon Valley for these efforts,” says Vivek Wadhwa, Wertheim Fellow at Harvard Law School and Executive in Residence at Duke University (a serial technology entrepreneur, Wadhwa has closely followed the fortunes of Cisco over the last couple of decades).

Elfrink’s A-team Cisco’s Chief Globalisation Officer works with a small team hand-picked from across the world.
1. Syed Hoda Chief of Staff/Globalisation Office One of the first people to make the move to Bangalore after Cisco announced its globalisation plans, Hoda is the hands-on person who executes this new strategy	2. Leo Scrivner VP (Human Resources) If Cisco is to execute this ambitious globalisation programme, then it will need Scrivner to coax the best top and middle talent within the company to consider a move to India	3.Aravind Sitaraman Managing Director/Cisco Development Organisation A 22-year industry veteran, Sitaraman will help Cisco’s R&D unit change focus to develop products and solutions for emerging economies	4. Mrinalini Ingram Senior Director (Finance)/Globalisation Office Cisco CEO John Chambers announced an ambitious $1.1-billion investment plan for India back in 2005 and Ingram holds the keys to these millions

There are already some positive signs for the globalisation initiative of Cisco. For example, it has inked a pact to provide quadplay (data, voice, video and mobile communication) to the 156-million square metre Prince Abdulaziz Bin Musaed Economic City in Saudi Arabia. Elsewhere, Cisco has said it will invest $1.5 billion (Rs 6,450 crore) in developing UAE’s ICT infrastructure and has signed up with state-run Silatech in Qatar to develop technology platforms to support employment requirements in the country. Says Elfrink: “Globalisation isn’t an India-only strategy and we are looking at other emerging economies such as Russia, Brazil and China to boost our presence.”

Cisco has earned in excess of $1 billion (Rs 4,300 crore) from its India operations and has over 5,000 people (across its captive and partner teams) working on R&D in the country. In a small office with a white board littered with notes in three different colours, Aravind Sitaraman, Managing Director of Cisco Development Organisation (it oversees both captive and third-party developers), is beginning to overhaul the way his teams undertake their work. “We are building solutions specifically for these emerging markets,” he claims. Currently, Cisco’s India R&D works on optical software, aggregation, gigabit switch and router work. Besides, India is a centre of excellence for its unified communications product line.

Elfrink is now set to transfer those skills to emerging markets, where his engineers will be challenged to think out of the box and innovate on the completely new solutions. “This involves a complete change in strategy and orientation, but we’re making progress,” says Sitaraman. From leveraging cost for the company’s global operations, Cisco’s India R&D will now become a hub of breakthrough innovation. “We hope to export some breakthrough ideas to the West,” says Sitaraman. Cisco is teaming up with the likes of Satyam (where it owns a $100-million or Rs 430-crore minority stake in the JV) to deploy and manage medical distress solutions for the global market and is working on pilot projects with the likes of NIIT to develop a rural kiosk to deliver services for rural areas, using existing and future networks. “We want to see what kind of business one can generate in rural areas. We can’t remotely deliver solutions for emerging markets; we have to be close to innovation here and the scale of the market itself,” says Elfrink.

Wim Elfrink Global way of life Two years after relocating to Bangalore, Wim Elfrink has redesigned his day to suit his new global outlook. 7 a.m.: At a time when most top executives would be finishing their morning run and beginning to get ready for work, Wim Elfrink is already an hour into work, virtually meeting his colleagues using Cisco’s Tele Presence conferencing technology 9 a.m.: A few hours meeting with colleagues in the US and Europe and initiating meetings with his team based in India. Besides relocating to India as Cisco’s Chief Globalisation Officer, Elfrink runs the $6-billion services arm of Cisco globally 3 p.m.: After several hours of meeting with colleagues, customers and visitors, Elfrink heads back home to be with his two sons, David and Max, 12 and 9, respectively, and his wife who’ve moved to Bangalore with him. “You don’t need to commute to compute,” he often tells his staff 6 p.m.: It’s time for another bout of work for Elfrink, as he once again logs on to the TP system and catches up with colleagues in North America just as they are about to begin their workday. As part of the globalisation process, Elfrink often works through the weekend (since some countries in West Asia like Saudi Arabia have differing weekly holidays) and takes a few days off after working for 10-12 days

Challenges aplenty

Besides retooling and reorienting its growing R&D operations, Cisco faces challenges on other fronts. Everyone beginning with Cisco’s charismatic CEO John Chambers will need to get used to this new management style, where senior executives will need to collaborate with their business unit heads in India. While Elfrink lets his managers handle face-to-face interactions with customers, he visits the US and Europe to front-end the really big deals. “Our business is currently in transition; we get 80 per cent of our business from mature markets, but two years ago we began reporting emerging economies (separately) and that today accounts for 20 per cent of our revenues,” Elfrink says.

Forrester’s Whitely argues that not all executives can make the leap from strong managers in a command-and-control environment to one that works with peers to make decisions as a group.

Cisco executives themselves admit that moving 20 per cent of the company’s top management to India won’t happen overnight; instead it could take five years to finish. While executives such as Elfrink, Chief of Staff Hoda and Sameer Padhye, Vice President (Services), were the early advocates of this programme, moving more senior managers may prove challenging. Over the long term, though, that may not be a big issue.

Scrivner’s mandate, for instance, is to develop Indian managerial talent to eventually take charge. “The first wave was expats from around the world, then came Indians relocating back home and we eventually plan to have local talent manage this centre,” he adds.

It is little surprise that Cisco is in a hurry to make this transition; CEO John Chambers is trying to sustain growth even as the market softens. Already, brokerage houses such as UBS have downgraded Cisco’s stock and the firm’s tech analyst, Nikos Theodosopoulos, notes in a recent memo that “recent checks indicate that in addition to prior softness in US enterprise, European enterprise is slowing a bit, and emerging markets, while still strong, are growing in the 25-30 per cent range, not the 30-40 per cent target”. Given that Cisco is already nearly $40 billion in annual revenues, it would be difficult to reach Chambers’ aggressive 12-17 per cent growth targets without making large acquisitions and compromising operating margins, writes Theodosopoulos.

Meanwhile, Cisco is focussing on developing talent locally. Padhye is perhaps an archetypical example of this effort. He started at Cisco when the company was just a 600-person outfit and over the last decade and more has had stints in Singapore, London and the US before relocating to India. “This is not just a change of location; we wanted to take a few business units, and run and grow them out of India,” he explains.

He believes that solutions in areas such as Wi-Max and optical networks will be driven from emerging markets. If Cisco’s audacious experiment works, then it will stand transformed not just in India but also in the US.