Cisco Shifts Senior Executives to India's Tech Hub
Wim Elfrink's climb up the corporate ladder has taken him from Holland to France, Italy, Switzerland and the United States.
But his latest promotion will take the Dutch polyglot far from his Western comfort zone. As the chief globalization officer at Cisco Systems Inc., Elfrink is taking his wife, two daughters and the family dog from suburban Silicon Valley to Bangalore, India.
"My mother-in-law said to my wife, 'What did you do to deserve this?'" said Elfrink, who was scheduled to depart Sunday for a luxury home he's leasing in the southern Indian tech hub. "I just tell people that I want to be where the innovation is."
Elfrink, who reports directly to Cisco CEO John Chambers, is the vanguard of one of the tech industry's most ambitious globalization campaigns.
The 50,000-person company wants 20 percent of senior managers working at the proposed Globalization Center in Bangalore by 2010. The executives will be a mixture of rising stars from San Jose and Bangalore and talent plucked from acquisitions and competitors worldwide.
International business experts say Cisco's executive migration is a shrewd move that should give high-ranking employees critical insight into one of the world's fastest growing economies.
Will Cisco successfully pull it off? Does the move foreshadow a brain drain of top talent from the United States?
"From John Chambers' point of view, it makes perfect sense," said Vivek Wadhwa, adjunct professor of globalization and engineering at Duke University. "As an academic and an American, I'm worried. Too much is happening too fast, and the U.S. could lose the ability and insight it takes to develop the next Internet or other big phenomenon."
Hundreds of Silicon Valley companies -- from Oracle Corp. and Yahoo Inc. to obscure startups -- are expanding in Asia's emerging economies. Under pressure from investors and venture capitalists to slash costs after the 2000 dot-com crash, some companies farmed out entire departments -- software development, data analysis, even research and development -- to developing countries, where workers earn a fraction of their American counterparts.
But top executives such as chief information and technology officers rarely saw their own positions moved halfway around the world -- in part because they typically command six-figure incomes and lucrative compensation packages no matter where they're living. Relocation costs and "hardship" allowances mean most companies pay more for executives to live in developing countries than near American headquarters.
The executive migration at Cisco -- the Silicon Valley's most richly valued company, based on market capitalization -- signals that offshoring has evolved from cost arbitrage to strategic imperative. Other companies will likely mirror Cisco's strategy, said AnnaLee Saxenian, dean of the School of Information at the University of California, Berkeley.
"In the past, executives assumed that managers could just set up shop in Bangalore and it would work just like it would in Cupertino or San Jose, only cheaper -- but in fact there are snags," she said. "People are finally realizing that the only way to create cultural capabilities, linguistic skills and personal social relationships is to move executives abroad."
IBM Corp. has about 150 executives living in emerging markets, including 35 in India and 89 in China. Last summer, the Armonk, N.Y.-based technology company moved its Global Procurement office from Somers, N.Y., to Shenzhen, China, and IBM Vice President John Paterson moved with it.
Even companies that aren't sending American executives packing acknowledge a long-term stint abroad may soon become a requirement for reaching the corporate pinnacle.
At online auctioneer eBay Inc., CEO Meg Whitman said the San Jose-based company increasingly looks to its foreign offices for rising stars. Whitman is modeling eBay after Proctor & Gamble Corp., where she serves on the board and 17 of the top 30 executives have international experience.
"What we're trying to do is to bring international talent to San Jose, not the other way around," Whitman said in a phone interview from Shanghai. "But you have to have a leadership team that's global, and that's what we aspire to be."
Cisco's initial deployment of executives -- Elfrink and seven who directly report to him -- will have immediate ripple effects in San Jose.
Chambers usually holds a conference call with top executives Fridays at 3 p.m. Pacific Time -- the middle of the night in Bangalore.
"Now whenever John plans a meeting, he will have to think about me," Elfrink said. "More broadly, all executives at Cisco and our partners will have to think about accommodating the entire world."
Roger Kay, founder and president of technology consulting firm Endpoint Technologies Inc., applauds Cisco's effort to promote Indians, but questions whether American executives who move there for a typical two- or three-year tour could become multicultural.
"It will give them some exposure and it's a glamorous job ... but it could create an Ivy League-type clique of expats who are richer than the locals," Kay said. "I doubt that most of them will stay long enough to learn a language beyond ordering food and beer. They're not 'going native' and getting deep expertise in the Indian market."
Leo Scrivner, Cisco vice president of human resources, disagrees.
The 48-year-old American will move to Bangalore later this month with his wife and two of his daughters (A third will remain in the United States but visit during college break). During his planned two years there, Scrivner will jump-start the hiring process for what is expected to become a 6,000-person Bangalore staff within five years.
His goal: 3,000 employees by mid-2008, including about 15 vice presidents, 60 directors and 300 managers.
Scrivner will lease a 3,000-square-foot house a short drive from the Cisco campus and Elfrink's house. They'll use Cisco's sophisticated TelePresence video equipment for conferences with California colleagues.
"We want to look at the whole globe as the talent pool," Scrivner said, "not just the people who are in front of us today."