That means Cisco is doing away with some business, acquiring newer ones, changing reporting structures and letting people go. And all of this is manifesting in India, the company’s second and only headquarters outside of San Jose, California.
The Ken learnt that Cisco sold its digital software TV unit NDS to engineering company Larsen & Toubro (L&T) group around November, from three people familiar with the sale. It was an Israeli company that had about 2000 engineers in India. And Cisco paid $5 billion to buy it in 2012. (Cisco has been letting go of people from this division since 2014.) And with the deal, about 600 engineers also became L&T employees.
The networking giant is also shutting product lines gradually. The Mobile Wireless Group is one, and the small-cell technology group—cells that help bring mobile network capacity close to the user—is another, confirmed two directors, one former and another in the company. These divisions have whittled down from a 200-300 member team to a 20-30 size over the last two-three years.
“Every Friday, we would get news that someone or the other has been let go,” said a former senior executive, who quit in the second half of 2017. While accurate numbers of the layoffs in India are not available, at least two senior employees pegged it at 500.
And with the latest round of reorganisation, Cisco India will not have an engineering head anymore.
The last engineering head, Amit Phadnis, quit the company in January 2017, as staying on would have meant a diminished responsibility. His role has not yet been filled. As senior vice president, he was responsible for core engineering with close to 3000 people reporting to him.
But immediately after Phadnis left, at the all-hands meeting, it was announced that no one will be taking Phadnis’ position, said a Cisco director. The Ken spoke to five senior Cisco India executives to confirm this. All of them wanted to stay anonymous as they are not authorised to speak to the media. Phadnis did not respond to messages where he was asked for his viewpoint.
The resounding message to Cisco India from this is one that it no longer gets any special treatment and is like any of the other hundreds of ‘sites’ Cisco has across the globe. The company is moving from a site-centric strategy to one focused on business units.
This is something that many other MNCs that set up in India go through.
“This is a cycle through which firms pass. Initially, when you enter a country, it makes sense to have a head to oversee all the business under one roof,” says Rajiv Krishnan MD of Korn Ferry Hay Group, an HR consulting firm. But as firms grow, different businesses grow at different rates and have different needs. “The reporting into a business unit is better than having a local reporting head. That way, a particular business is managed in a consistent way across the world,” he adds.
While for business reasons this could be the right call, the role of India for multinationals is not what it was originally made out to be. “Earlier, because of the cost arbitrage, India automatically was the chosen destination where projects would be assigned to get executed,” said a senior IBM executive. But that’s no longer the case. “India has to prove its worth as there is competition from numerous destinations like China, Central and Eastern Europe. No one is giving anything to India on a platter anymore.”
Coming a circle
Cessna Business Park in Bengaluru’s traffic-ridden IT corridor along the outer ring road has eight Cisco buildings packed with about 10,000 employees. Each time a new building came up on the campus, Cisco had the first right to refusal. And for the first time in a decade, in 2017, it said it didn’t want any more building space.
For years, its ebullient former CEO Chambers sold the dream to successive Indian governments that the company will hire more. It has now come to a point where Cisco will clearly not be expanding its headcount at the same rate as it once did in India.
“Cisco’s headcount has been more or less flattened over the years, and moreover, it grows through acquisitions, so it won’t hire at the same pace it did earlier,” says a director at the company.