MENA to fuel Cisco's future growth
Middle East and Africa is key emerging market for Cisco Systems after US woes.
The Middle East and Africa (MENA) is becoming a key market for Cisco Systems as the company outside its troubled US home-market, a senior executive has told ArabianBusiness.com in an exclusive interview.
"Emerging markets are the fastest growing part of Cisco Systems and the Middle East and Africa is the fastest growing region within our emerging markets," said Mark De Simone, Cisco System's MENA Vice-President.
De Simone, a former vice president of GE and Lucent technology, said that Cisco is planning to transform MENA from a target market into an export platform for Cisco's intellectual proprieties to other markets.
He also said that the company has big plans for Saudi Arabia, its major market in the Middle East, as the country is becoming a major hub for the company. This was obvious, he said, in Cisco's announcement that it is going to invest a billion Saudi riyals ($268 million) in the kingdom over the next five years.
Part of this investment will go to expand the existing Cisco Systems Networking Academy program by establishing a "Netversity" in Saudi Arabia that Cisco will use for training students from all over the Middle East.
"By this we are exporting talent out of Saudi Arabia," added De Simone.
De Simone also said that because of the new economic cities that are being developed in Saudi Arabia, Cisco has started the work on connecting communities programs that will not only connect businesses in the new economic cities but the entire communities living in them.
Cisco's Saudi digital cities model is so successful that Cisco is ‘selectively' exporting it to other countries. "This will enhance Saudi Arabia's role as a major hub for Cisco," asserted De Simone.
Economic growth fueled by skyrocketing oil prices is allowing for more fiscal spending by MENA countries on improving their infrastructures thus creating more opportunities for international companies like Cisco, the world's biggest maker of the switches and routers that direct internet traffic.
De Simone said that the region is important because many countries are building new infrastructure projects for the very first time. He added that Africa is also becoming important because money from the Gulf is channeled to it through acquisitions.
"The countries are leveraging some of the wealth from the energy field to reinvest back in their economies. This is very different from what happened 20 or 30 years ago," added De Simone.
In the MENA region, countries have started to look at technology as a vehicle for Economic change, education, health care, and leveraging natural wealth, according to De Simone.
Cisco's operations in the US are witnessing a "dramatic year-on-year decreases in orders" from big US banks, Cisco's major customers, which were hit by the sub-prime mortgage crisis.
Cisco Systems CEO John Chambers triggered the fears of investors one week back when he said that his company will continue to expect US enterprise growth to be very lumpy. However, Chambers was still optimistic about growth in emerging markets.
Orders from emerging markets grew about 35 percent year-on-year in the first quarter of 2007, Cisco said.
"The West is now a legacy," said De Simone who explained that because infrastructure has already been laid down in Western countries, Western companies' strategies shifted towards optimization and adjustment.
The infrastructure businesses although very profitable, they are very lumpy. "Some quarters you have big large orders and other quarters you don't, but if you take the curve of the last and next two years, you will see that the business is going in the right direction," explained De Simone.
The Middle East and Africa region has the greatest potential for Cisco in the coming years yet the company has to deal with the major challenge of limited availability of skillful workers.
"We have to train more engineers, telecommunications and computing experts to deliver our projects. More important we need to train business managers who can leverage technology," said De Simone.
The creation of the Technology and Entrepreneurship Innovation Center in Saudi Arabia will help Cisco to shorten the gab of qualified business managers. In addition, Cisco is supporting King Abdullah University for Science and Technology in Saudi Arabia and the School of Government in Dubai to develop more skills in the region.
Cisco support is not limited to educational institutions as the company is supporting Egyptian ministries to develop the skill of their public servants, added De Simone.