Cisco is putting money, staff and training facilities into Russia as it deepens its relationship with the Skolkovo Foundation, the organisation behind the country's attempt to clone the success of Silicon Valley.
Cisco has revealed details of its investment in the Skolkovo Project, a Russian initiative set up to mimic the success of Silicon Valley.Image credit: Cisco
The San Jose, California-based networking company formally agreed on a strategy with the Russian foundation on Thursday. This commits Cisco to putting an unspecified amount of cash into the scheme in Skolkovo, west of Moscow, and to offering certification, training and employment to people across Russia, as part of an existing multi-year $1bn (£624m) investment in the country.
"Establishing a physical presence in Skolkovo will mark a major step forward in delivering on the phased plan we initiated during the presidential visit to San Jose in June 2010," said Marthin De Beer, head of Cisco's video and collaboration group, in reference to a visit by Russian president Dmitry Medvedev to California.
"We are not only creating employment opportunities for the brightest talent in the Russian innovation economy, but also expanding Cisco's global R&D efforts and building the foundation for our continued growth," he added.
The Skolkovo Project, launched in mid-2010, has already garnered investment from Microsoft. Additionally, £2.2bn has been earmarked from the Russian public purse for the project over the next five years.
Cisco growth strategy
Cisco's Russian investment is double the amount it has pledged for the UK. In January 2011, the company promised to funnel around $500m into the British economy, part of which is going toward the UK's Silicon Valley-inspired effort, East London Tech City.
We are not only creating employment opportunities for the brightest talent in the Russian innovation economy, but also expanding Cisco's global R&D efforts.
– Marthin De Beer, Cisco
"I wouldn't necessarily read too much into what [these investments] mean for the relative prospects of each economy or how Cisco may be feeling," said Neil Shearing, chief emerging markets economist at UK analyst company Capital Economics.
The Skolkovo plans could be part of the multinational's overall growth strategy, Shearing told ZDNet UK.
Russia is "still a relatively underdeveloped market in many respects, though growth over the early part of the last decade [has been] relatively strong", he noted.
"There are plenty of reasons to think why you would want to be there if you're a technology company," he added, noting that "internet use per head of population is still comparatively low". This would give a networking company such as Cisco greater scope for new business than a country with more developed infrastructure.
Skolkovo plans
As part of its investment, Cisco plans to set up a research and development centre in Skolkovo. This will focus on "high-impact areas of the business" such as video and internal start-ups, the company said.
In addition, the Silicon Valley stalwart has promised to help the Russian project to open an "entrepreneurship institute" within the Skolkovo Technopark to train locals in getting technology-focused start-ups off the ground. The strategy also calls for the number of Cisco Networking Academies in Russia, which handle certification, to go from 217 to 650 by mid-2014. It will also set up a year-long scheme to recruit and train sales agents and systems engineers.
The company will deepen its relationship with Russian venture capitalists via the Almaz/Cisco Venture Capital Fund, and aims to invest in Russian companies that indirectly and directly deal with the types of research Cisco will carry out at the Skolkovo R&D centre.