The tech giant had to adapt its India strategy. En route it may have found its global flightplan
Three years ago, John T. Chambers, chairman and chief executive of Cisco, was on one of his annual trips to India. He happened to meet K.V. Kamath who was nearing the end of his tenure as CEO and managing director of ICICI Bank. Chambers wanted to understand the biggest business challenges that banks were facing. Kamath touched upon the theme of financial inclusion and said banks needed solutions to serve the 600 million plus people who don’t have access to banks.
Chambers and Cisco India president Naresh Wadhwa took that advice very seriously. Kamath did not realise it, but his observation helped shape Cisco India’s strategy and later dovetail into Cisco’s global strategy.
Globally, Cisco has been talking about being involved in building smart communities or smart cities for some time. In India that approach would have worked wonders had many new cities come up. That hasn’t happened. Much of India’s urbanisation is taking place in existing cities. (Lavasa, near Pune in Maharashtra, was an example of a new city but its development has run into problems.)
When Cisco came to India 15 years ago, it was another multinational company viewing the country from its US-anchored leadership prism. By 2004-05, recalls Wadhwa, the company realised it needed to create the market it wished to serve. Engagement with large enterprises and governments began in earnest, followed by strengthening of a partner network that today is 1,200-strong. It also switched from geographical expansion to vertical focus — every time it went to a new location, it hunkered down to fill gaps in the local market.
“It’s all about timing; I think by now we know the art,” says Wadhwa. Like the “significant deal” Cisco is closing with one of the largest cable operators in India for supplying set top boxes that convert analog signals to digital. The company spotted this need while engaging with local customers in Kerala and spent six months modifying the box developed by one of its Chinese acquisitions.
In the developed markets, Cisco is driving convergence of Internet, TV and video-conferencing in homes and in offices. In India, it believes in offering tailor-made solutions to the customer. In 2009, it signed an agreement with Ashok Leyland to build the so-called ‘vehicle-to-infrastructure’ communication. Ashok Leyland buses can be modified to deliver mobile services for emergency medical response, transport management, security and surveillance in defence and government sectors.
Cisco built on this idea to start a Bank-on-Wheels for banking in remote rural areas. The Bank-on-Wheels simulates the functionality of an entire bank branch in a bus.
“We have the prototype, the proof-of-concept, as well as the business case,” says Anil Bhasin, senior vice president — Cisco India & SAARC (BFSI and Enterprise), who is talking to a few banks in India to run pilot projects. He wouldn’t disclose their names. The mobile bank can do all that a branch does, even provide expert advice, enabled by Cisco’s compressed video technology that requires less bandwidth.
Bhasin thinks the cost-effectiveness of this solution will appeal to the banks which have been driven by RBI directives to rapidly reach out to the villages, as only 50,000 of India’s 600,000 villages have organised bank branches. At Rs. 25 lakh to Rs. 30 lakh, this bus, equipped with all the three layers of Cisco technologies that allow voice, video and data transmission, could serve 10-12 villages. “That works out to about Rs. 2.5 lakh per village and if the amortisation [rate of recovery] is poor, a bank is free to move the van to another village,” says Bhasin.
Infographic: Hemal Sheth
Rajiv Kaul, chief executive of CMS Infosystems, which also manages infrastructure for banks, cautions that operational expense may not come down. “Moreover, moving cash in a van is a risky proposition. How will the banks manage security?”
Bhasin says such scenarios will come up as “something like this hasn’t been tried before anywhere; we’ll learn along the way.” In reality, Cisco may have to increase its service offering. Bank-on-Wheels is a novel concept for villagers, no doubt, says V. Vaidyanathan, vice chairman and managing director, Future Capital Holdings (he was formerly with the ICICI Group). “But Cisco could explore other services to add on to the same connectivity pipe, like healthcare or entertainment, that will add to viability and also cause stickiness of customer behaviour.”