Networking is business critical
Salgame, President, India and SAARC, Cisco Systems, says that although Indian
enterprises are at a nascent stage of technology adoption, the IT market will
grow. A sound network will make or break the success of every business. by Soutiman
What stage of the technology lifecycle are
Indian enterprises currently in? Are they in a nascent, mature or developing
Indian enterprises are currently in a nascent stage in terms
of technology adoption. According to one study, Indian companies spend less
that 1 percent of their total revenues on IT, while Fortune 500 companies spend
about 8 percent.
According to one study, Indian companies spend less
that 1 percent of their total revenues on IT, while Fortune 500 companies
spend about 8 percent
Five years ago such statistics did not matter because Indian
companies were not competing globally. We had a closed economy where productivity
was not paramount. Product quality was not given much importance. Now however,
in a free global market scenario, Indian companies have to compete with world-class
companies even in the domestic market. This means that they have to get their
information infrastructure on par with global standards before it's too late
to regain marketshare.
Indian companies that are market leaders, forward-thinking and bold have begun
to invest heavily in building their networking infrastructure because they know
that networking provides them with an edge over rivals and is the underpinning
Which industry vertical has generated the highest amount
of revenue for your organisation?
We have divided our business into segments based on customer feedback and what
the market looks like. They are IT services, service providers, government,
defence, enterprises, SMBs and channels.
The government and defence segments are small in size, but the others are relatively
big and growing quickly. Spending in the service provider segment happens in
chunks; the deals are larger and the buying is cyclical. Buying among IT services
companies is not cyclical but a continuous process, so in one quarter a certain
segment will register a lot of growth, while in another it may not. However,
if you look at it on a yearly basis, all cylinders are firing synchronously
and all business segments are doing well.
Which segment is set to register the highest growth this
We believe that all the business segments mentioned earlier will grow phenomenally,
not only this year but for quite a few years from now.
However, the automobile manufacturing industry is growing fast and we have our
eyes on it. I'm not saying that it's growing faster than other industry segments,
but it's coming up well and has already shown a lot of promise.
Even a couple of years ago, the automobile industry did not show many signs
of being competitive in the domestic or international market. Today, companies
such as Bajaj, Tata Motors and the TVS Group have got their act together and
have geared up for many advancements. They all want to compete on an international
level, and against the global players in India. They also realise that to be
more productive it is necessary to increase their IT spending.
The IT services companies will keep investing in IT because it is part of their
basic business model. The whole outsourcing industry was created for two reasonscheap
and qualified labour, and networking infrastructure. The latter has made India
successful in the IT services market, and this market continues to grow for
I believe that this interest in networking is only the beginning,
and networking will drive future successes. Overall, it is good for the Indian
economy and also for Cisco.
core market for networking devices has slowed in developed countries such as
the United States. Do you think that the market in India will reach a similar
saturation point and slow down? If yes, when will that happen?
The Indian market may someday reach a saturation stage and
slow down. However, it will not be in my working lifetime.
If you look at the long-term economic growth of the country, it will be at an
average rate of 5-7 percent, if not higher, for the next 20-30 years. There
will be significant growth in GDP, which will demand continuous investments
in IT infrastructure.
GDP, IT investments and productivity are correlated. So if GDP is driven by
IT investments, the productivity of the nation goes up and the nation gets stronger.
The market estimates that you will achieve $1 billion
in revenue by 2007 in India. Do you feel you can achieve it?
Overall, we're doing well and are on track. The last fiscal
was a significant and breakaway year for the Indian market. We gained significant
marketshare across all product categories.
GDP, IT investments and productivity are correlated.
So if GDP is driven by IT investments, the productivity of the nation
goes up and the nation gets stronger
In the routing category we maintained a marketshare of about
90 percent. In the switching category we gained a 15 percent marketshare, which
increased our total switches' share to about 71 percent in February.
All our new products in areas such as IP telephony, wireless and security have
about 45-50 percent marketsharewhen about 12 months ago we didn't have
any products in that space.
Other networking equipment manufacturers have made separate market figures based
on edge, core and access devices. What about your organisation?
Rather than looking at the differentiation between edge, core and access devices,
it's important to look at what the customers want and what their behaviour is.
If you look at some of the deals we have struck, such as the one with VSNL,
you'll see that it's an end-to-end infrastructure deployment project, all based
on Cisco technologies and solutions. A few companies may choose to buy a couple
of devices from a different vendor, along with our equipment, and deploy them.
If you look at our overall marketshare there has been no change in our position.
What strategy do you have for Indian SMBs which look for
quality IT infrastructure but have issues with affordability?
In our experience, the SMB market's primary focus is not cost, but performance
and value. If they use solutions from a company such as ours, which provides
value in innovation, R&D and after-sales support, the issue of affordability
is addressed with long-term savings and benefits.
Soutiman Das Gupta can be reached at