Why Is Cisco's John Chambers Investing $1.16 Billion in India? ; Because He Thinks Indian R&D Can Deliver (Yawn!). Because He Believes the Indian Market Is a Very Important One for Cisco, in the Future, and, Even Now (What?). And Because of an Outsider Called Rangu Salgame (Who?).

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Keep an eye on this guy," says john t. Chambers, President and CEO, Cisco, to one of his aides, pointing to Rangu Salgame, President (South Asia), Cisco Systems. "He's going to go places." That remark may have been meant for the benefit of this writer- American CEOs are notoriously media-savvy-and then, it may not have been. In a time-paradox of the sort that would have made Philip K. Dick rub his hands in anticipation of more confusion to come, Salgame, who signed on with the company in late 2003, is the beginning of Cisco's Indian Odyssey that actually began with a $200- million (Rs 940-crore at the then exchange rate) investment in 2001, an investment that has since grown to around $700 million (Rs 3,150 crore at today's exchange rate) by some estimates. It is a start that has culminated in the company's decision to invest $1.16 billion in India over the next three years, arguably the single largest foreign investment in it in the country, and, cumulatively, with the $700 million, a number that dwarfs the investment of multinational companies in capital-intensive businesses. General Electric is a case in point; during his visit to India in May this year, its CEO Jeff Immelt let on that the company had invested $600 million in India over the years. So, what does Cisco see in India?

In one word: a market. "India," a refrain popular among visiting CEOs goes, "is a great resource base for us." And then they launch into paeans about "Indian brainpower", "Indian talent" and "Indian R&D". Chambers, now into his 11th year as CEO, believes that too, which is why $750 million of the $1.16 million will go into investments in R&D. He is also bullish enough on the Indian market- bullish to an extent that rules out any posturing-to have earmarked $100 million (Rs 450 crore) of the total for investments in marketing infrastructure. That amount may look insignificant to lay readers, but as a senior executive in an Indian it firm puts it, "$100 million in marketing? What are they going to do, sell soap?" The point being that Cisco's products do not require as much marketing-spend (or anywhere close) as fast moving consumer goods such as soaps.

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Why Is Cisco's John Chambers Investing $1.16 Billion in India? ; Because He Thinks Indian R&D Can Deliver (Yawn!). Because He Believes the Indian Market Is a Very Important One for Cisco, in the Future, and, Even Now (What?). And Because of an Outsider Called Rangu Salgame (Who?).

Companies, strangely enough, and CEOs are only human. They view the country that is a 'resource base' in one way, a country that is a large market for their products in another, and one that is both in still another. That India, from Cisco's point of view, is both a market and a base for R&D efforts is evident from the way the $1.16 billion investment breaks up: $750 million in R&D, $100 million in marketing, $150 million in Cisco Capital, its leasing arm, $100 million in its venture capital (VC) arm, $50 million in its to-be- constructed campus in Bangalore, and $10 million in e-governance initiatives it will support along with the government of India. "Nowhere outside the us do we have this entire spread of activities," says Chambers. "We have never done it across such a broad range of areas ever before in our history."

The Making Of A Market

It wasn't always this way for Cisco in India. Circa 2003, it had fed moderately off the great Indian telecom boom,...

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