Cisco's big investment

Cisco's billion dollar investment plan for the UAE promises to build a true regional centre for the network, if the global financial climate doesn't stop the show

  • E-Mail
By  Mark Sutton Published  January 22, 2008

It may have been the day the markets dived, but networking giant Cisco was not dissuaded on Monday from announcing a new billion dollar investment plan for the UAE.

The plan, is Cisco's second big investment announcement for the region in the past two years, following a billion Saudi Riyal announcement in 2006, not to mention another agreement with Qatar Science and Technology Park, signed today, for a $40 million research centre. The two announcements are also broadly the same - more staff, greater reach, more skills, more training - although the UAE investment is significantly more. That said, while Cisco describes the figure of 5.8 billion dhs as an aggressive estimate of what they will need to spend over the next five years, their plans for expansion are no less aggressive, or ambitious.

Headcount increase is one of the headline targets of the announcement, with the UAE aiming to add another 650 staff, to make 1,000 in the UAE; in addition to the 500 extra promised for Saudi Arabia. That's a lot of staff however you look at it, and while the UAE office is introducing a number of new regional functions, such rampant expansion could be symptomatic of a company that's had a good few years of profitability and is now not afraid to spend some money. Long term, does it make sense to build such a large workforce for the region?

Setting up Cisco Capital for the MEA region is a welcome move. While vendor financing is not a model that has really been necessary in cash-rich GCC countries, a renewed focus on developing markets, backed with hard cash from Cisco is a positive.

Expanding the Cisco Networking Academy program is the other big string of the announcement. The UAE did not put a figure on how many new academies would be established, but Saudi has already promised an extra 100, and the thinking is definitely more is better. At present the program works almost exclusively with universities, and universities with Computer Sciences courses at that. In this context, these programs make perfect sense - there is a global shortage of networking skills, and the academies give students who are already heading for ICT careers a head start in building those skills.

But any training program, particularly one that aims to produce employable graduates, needs to be closely linked to emerging technologies and needs to be carefully monitored to ensure it is delivering results. Without close supervision, the qualification can run away from the vendor - like the Microsoft MCSE - and end up virtually worthless. Cisco needs to be prepared to invest a lot in micromanagement if its going to keep the value in its academies.

The big question is what impact the predicted global recession will have on this investment? The Gulf is always touted as being recession-proof, but the rest of the world isn't. Development in the region is likely to carry on, and most Cisco projects are sensible infrastructure investments, not fly-by-night Web 2.0 type deployments, so it would seem likely that revenues from key sectors will continue to pour in, albeity more slowly than before.

But if the situation on the global stage is not so rosy, will head office still be willing to put so much money into a region that, while growing, is still not a massive contributor to global revenues? Will a company feeling the squeeze still be willing to duplicate functions over different regions or put so much investment into funding third-party training? And if Cisco does end up having to scale back its plans, what happens to all those new staff, and those new graduates who were expecting jobs in ICT?

Cisco made a number of announcements for the region this week, during John Chambers visit, and although Chambers was pictured in various meetings, shaking hands and cutting ribbons and so on, he didn't spend any time with the media, and there was no comment from the man himself on any of the announcements -so was he really here, or was it perhaps, a hologram?

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code