We're starting manufacturing of networking equipment: Cisco's Chittilapilly

We have announced plans to start manufacturing in Chennai because our subcontractors have a presence there, said Daisy Chittilapilly, President, Cisco India and SAARC

Recently, networking major Cisco said it is making significant investments in manufacturing capabilities in India with an aim to drive over $1 billion in combined exports and domestic production over the next few years. Daisy Chittilapilly, president, Cisco India and SAARC, talks about the reasons behind Cisco’s manufacturing push and its focus on generative artificial intelligence (AI), in a face-to-face interview with Ayushman Baruah in Bengaluru. Edited excerpts:

Why is Cisco investing big in manufacturing now?

At Cisco, we are always looking at the agility and resilience of our supply chain. So, that is a constant process, and obviously Covid has only intensified the debate and the dialogue around that conversation, so that is obviously a factor. The fact that the Government of India is so focused in terms of making India a manufacturing leader in the world stage is equally important to brands like Cisco and others. We are in an economy where manufacturing as a percentage of GDP at 17 per cent is underperforming, but the government has a clear path. And, manufacturing has to get north of 25 per cent of GDP for us to keep our economic goals in sight. Then yes, there are incentive schemes. The government is announcing a lot of incentives like PLI (production-linked incentive), which are obviously attractive, and most importantly, the ecosystem in India is maturing. There is also a strong demand domestically for technology. In addition, we have always been a very strong talent hub and there has been no dearth of engineering talent.

Do you plan to set up any manufacturing hubs across states in India?

Our model worldwide is to manufacture through subcontractors. We have announced plans to start manufacturing in Chennai because our subcontractors have a presence there, and that is how we made Chennai an informed choice of destination.

Will you manufacture only in Chennai or look at other states too?  

Right now, it will only be in Chennai. There are no other plans at this point in time. Nobody can foretell the future.

How big will the Chennai production facility be?

The billion dollars that we have announced is the capacity of the first limit we want to hit in terms of production output from that plant. In terms of employment, we are beginning the first stage with about 1,200 people who will support the efforts. To begin with, we are focussing on networking equipment, including routing and switching portfolio.

Where does Cisco fit in the Generative AI space?  

Our philosophy today is to go slow, so that we can move fast. The thinking behind that is Gen AI is a tool whose implications and ramifications are still being discovered. There are a lot of positive possibilities, but at the same time, it is a tool that has a lot of concerns around data, privacy, copyright, and cyber security. So, as a company, our position towards AI has always been to use it responsibly and have an ethical framework around it. We are in the process of looking at all the ramifications of using Gen AI inside Cisco’s processes and technology. AI is not an unknown topic to Cisco.

What are the trends you are seeing in the routing and switching space in India?

I think we see demand in three or four spaces in the country and there are sector-specific nuances but they are applicable across all sectors. Infrastructure modernisation is a big driver that obviously supports all other digital initiatives that create competitiveness for firms. Related to that, sustainability is also becoming a reason for infrastructure modernisation. There is also recognition from companies to balance the planet with profit, as well as real costs emerging from inefficiencies and energy.
 

So, it is technical debt plus newer considerations around energy costs and sustainability that is powering infrastructure modernisation. This is across verticals. We are also seeing a lot of tech spends in the workplace and customer transformation piece. Then 5G is another key driver as telecom providers expand and upgrade their networks. Then, we have app modernisation that is driving distribution of workloads between private and public data centres and public clouds.