Cisco “Globalization”

The theme of our Cisco visit was growth, innovation, and talent, or “India as a platform”. Cisco has decided to create a second “global headquarters” in Bangalore, and attempt to truly implement the concept of a 24 hour company.

We met Syed Hoda, Director of Operations, Leo Scrivner, VP, HR and Mrinalini Ingram, Director of Finance. When we were in the new campus, we also were lucky to hear from Aravind Sitaraman, VP and MD (Indian Engineering Operations) who had just then moved to India from San Jose.

Cisco considers Bangalore the correct choice for their second headquarters for three primary reasons. First, Bangalore is just a 5 hour direct flight to 70% of the world’s population, and as previously mentioned by Professor Gowda has a highly educated, young population with an entrepreneurial spirit. Second, legislation around IP protection was of critical importance when comparing against other potential locations such as China. Finally, the fact that India speaks English as the official language eliminates language challenges faced by other countries that were considered.

The Cisco leadership we spoke with emphasized that Cisco was not moving to India because of cost advantages, and cautioned against the short-sighted perspective of companies who move to India or do business with India for pricing reasons, as the cost of labor and doing business is rising rapidly. Instead, Cisco is focusing on cultivating the engineering talent in India through “skills incubation” and “smart sourcing”.

Cisco’s vision is to hire and retain top talent that can be trained at Cisco and subsequently deployed on projects throughout the world through virtual teams. Dubai, Singapore and Saudi Arabia as examples are all expanding their infrastructure rapidly, and in some cases need over 1000 engineers to design and implement these infrastructure projects. Cisco intends to be the company to handle these next generation network programs.

One of the key elements that Cisco is banking their success on is their leadership team. Cisco has purposefully moved a group of their senior leaders from San Jose to Bangalore to ensure that the corporate culture and vision is translated to the 2nd headquarters. Their goal is to open a campus where people are proud to work, specifically based off of the Googleplex in Mountain View. The India team is not being looked at to outsource existing accounts, but rather to create new beachhead accounts that can be incorporated into the global business and managed in India. In addition, the India team aims to uncover two new global verticals that will be managed by the India team.

While Cisco’s vision is a lofty and innovative goal, some challenges instantly come to mind from an execution perspective. Having worked for companies that outsource application development and product engineering to India, my experience has been that the cons have tended to outweigh the pros of this model. While the hypothesis is that the costs of the project will be reduced by outsourcing development to India, in many cases it seems to dramatically increase the overhead required to communicate and manage the projects remotely.

Perhaps this is an implementation issue, but in my experience the perceived gains in productivity by having 24 hour development fall apart when requirements are not precisely communicated, or documents are delayed by a few hours. As an example, when a design document is not completed by end of business on Monday in San Jose, even if there is just another hour of input required the next morning before the document is complete you have already lost a full day of development work in India, causing the project to slip by an entire day, rather than just a couple of hours. The end results I have observed have been significant project delays, and code that had to be rewritten multiple times due to miscommunication of requirements across teams.

On top of these consequences, there is a serious impact to the employees on both sides of the globe from a work-balance perspective. When project managers have to extend their days for conference calls to India that extend to 10pm or later, and remote teams have to begin their days at 5am to participate in headquarters meetings, the days of a “normal workday” are over. Eventually both teams get burned out, as they end up working 15-20 hour days, which is not sustainable over the long-term, leading to higher levels of attrition and knowledge loss.

Perhaps the idea of the 24 hour company could work if each division truly operated independently. But if the whole premise of the opportunity is that we are becoming a global economy that is interdependent on each other, and that the workforce will exist as virtual teams deployed throughout the world, significant obstacles in terms of work hours and communication standards must be addressed. Cisco demonstrated their impressive global video conferencing capabilities, but in the back of my mind I wondered what time all of the employees were at work across the U.S., India, Europe, and Australia to be part of the revolutionary experience they showcased?

- Eileen McSweeney