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Production in Russia
Main article: Production Cisco Systems in Russia
2019: Sales growth in Russia for 6% in dollars
In general over BRICM countries (Brazil, Russia, India, China, Mexico) Cisco turnover from sales of products was reduced by 1% with especially strong falling in China – minus 16%. However Russia and also India and Mexico where growth was observed, allowed to level negative effect, said in the annual report of the company.
At the Russian office Cisco at the time of the publication could not comment on TAdviser that became for them drivers of positive dynamics in 2019. Sales of Cisco in Russia began to show growth in 2017-2018 after significant recession again. The head of Cisco in Russia Jonathan Sparrow explained an exit to plus with significant change of a command of local office and also aspiration to flexibility earlier: when it is possible, Cisco provides "good discounts", he said.
The company noted that sales growth in Russia was promoted also by focus of Cisco on increase in local production.
In Russia at the company two legal persons who generate revenue from direct contracts: Cisco Systems and Cisco Solutions. In rubles their consolidated revenues in 2018 calendar year also grew – to 31.8 billion rubles. With such indicator in a ranking of TAdviser top-50 the Russian representative offices of the foreign IT companies with the largest turnovers Cisco took the 9th place.
Sales of Cisco in 2019 grew, despite a course towards import substitution in Russia. It is known of practice of replacement of the equipment of the American vendor on domestic during this period. So, for example, in March plans of FCS for replacement with the Russian solutions of the telecom equipment of Cisco in view of impossibility for the last appeared in media to deliver it to department in the conditions of sanctions.
It is necessary to tell that for the last year, despite not the simplest situation in Russia, tell about growth also other large American vendors. So, told about increase in volumes of business in Oracle. And in VMware said that their local business business in 2018 even grew much more in high gear in dollars, than on average in the world.
Affiliate program of Cisco Systems
Johnathan Sparrou in an interview of TAdviser - about digital economy and work in difficult conditions
In May, 2019 the vice president of Cisco for work in Russia and the CIS Johnathan Sparrou in an interview of TAdviser told about plans for business development and productions of the company in Russia and also about how he is worked with it in the difficult conditions which developed in the country for foreign vendors.
Cooperation with the HSE and Rostelecom in digitalization of educational processes
On April 4, 2019 HIGHER SCHOOL OF ECONOMICS NATIONAL RESEARCH UNIVERSITY reported that together with the companies Cisco and "Rostelecom" signed the five-year agreement on cooperation directed to implementation of joint activities within education the Digital program, digitalization of educational processes and training of qualified specialists for hi-tech economies. Creation in Higher School of Economics National Research University of the joint educational and research Center of Digital Technologies will be result of signing of the tripartite agreement. In more detail here.
Agreements of intent of cooperation with TyumGU and Russian society "Znaniye"
On March 26, 2019 Cisco announced agreement signature about intentions of cooperation with the Tyumen state university and the Russian society "Znaniye". Within these agreements calculated on 3 years, the parties will develop educational programs and to implement the different initiatives directed to digitalization of educational processes and training of qualified specialists for hi-tech economy.
|Cisco participates many years in the initiatives directed to training of professionals for digitalization of the Russian economy, – Johnathan Sparrou, the vice president of Cisco for work in Russia and the CIS says. – Through "Network academy Cisco" we support tens of thousands of young people who decided to connect the future with high technologies. Having been trained according to our program, many of them continue development in this professional sphere. It is sure that agreements with the Tyumen state university and the Russian society "Znaniye" will contribute significantly to creation of the personnel base for highly effective digital economy of Russia".|
Together with the public and state educational organization the Russian society "Znaniye" Cisco is going to promote digitalization of economy through training of qualified specialists in the field of IT. So, the parties intend to popularize modern educational technologies and IT literacy among Russians and also to extend training and educational materials of Znaniye in Russia and beyond its limits through "Network academy Cisco". Besides, cooperation of "Network academy Cisco" and the Russian society "Znaniye" will become a basis for training of specialists according to the professional standard "The Consultant in the field of Development of Digital Literacy of the Population (the Digital Curator)". The digital curator – little known profession in Russia: the standard is adopted by the Ministry of Labour and Social Protection of the Russian Federation and registered by the Ministry of Justice of the Russian Federation at the end of 2018. It will be possible to receive a profession based on already existing "Network academies Cisco". Instructors and listeners will get access to the training materials developed by the Russian society "Znaniye" for preparation on the implemented professional standard.
The agreement between Cisco and the Tyumen state university opens possibilities of a training of students and graduates in Cisco, does possible the organization and holding the joint presentations, seminars, conferences, round tables, development of educational and methodical documentation, carrying out joint educational surveys, business projects, development of IT education at the university. Thus, Cisco intends to promote development of IT education in TyumGU through the program "Network Academy Cisco" - courses of fundamental training of specialists in the field of design, construction and operation of communication networks.
|"The coming era of digital economy in Russia is possible at synergy of different modern technologies, – Lyubov Dukhanina, the chairman of the Russian society "Znaniye" commented. – The signed agreement between the Russian society "Znaniye" and Cisco company is a striking example of similar synergy effect in education and education. The planned joint activities will allow us to provide training in modern specialties of digital economy and also to involve a general population in use of end-to-end technologies both on professional, and at the household level".|
|Digitalization should become the key instrument of construction of uniform educational space. For the university it is important to design and fill modern digital educational medium, – Valery Falkov, the rector of the Tyumen state university told. – We understand that it is possible to make it only in partnership with world leaders, such as Cisco. Therefore we are interested in cooperation as in the fields of education, sciences, developments and implementations of professional educational programs, and regarding the organization the practician and training of students"|
Business of Cisco began to grow in Russia after long recession
In 2017 and 2018 of sale of Cisco in Russia began to show growth. So, in 2017 calendar year, according to base " circuit.focus ", consolidated revenues of two main legal persons of Cisco in Russia – Cisco Systems and Cisco Solutions, grew by 41%, to 27.5 billion rubles. According to TAdviser, it is close to the aggregate turnover of Cisco in Russia. At Cisco Systems, in particular, it was reduced by 47%, to 2.4 billion, but due to growth Cisco Solutions there was cumulative positive dynamics.
The exact volume of business and dynamics in dollars in the company are not disclosed. However earlier the company in the report on form 10-K submitted to the U.S. Securities and Exchange Commission announced growth of revenue from sales of products in Russia for 20% in 2017 financial year (came to the end for Cisco in July, 2017). Then Russia became one of the countries which showed the highest dynamics of sales of products among emerging markets, follows from the report of Cisco.
For several last years it became the first references of positive dynamics on sales of Cisco in Russia in open sources. Before Cisco several years in a row in conference calls with top managers of the company concerning financial results and in the reports periodically reported on negative revenue development and order amounts in Russia.
In 2018 financial year (came to the end for Cisco in July, 2018) positive dynamics remained: sales of the products Cisco in Russia grew in dollars by 10%, follows from the report of Cisco on form 10-K given to the U.S. Securities and Exchange Commission.
Before sale of Cisco in Russia braked both sanctions, and drop in oil prices, influencing directly ruble exchange rate. Because of growth of dollar exchange rate the products Cisco for the Russian customers rose in price.
The vice president of Cisco in Russia and the CIS Johnathan Sparrou in October explained TAdviser that allowed Cisco to achieve growth of revenue in Russia. One of the most important factors of sales growth he called TAdviser significant change of a command of local office. From those who worked in Cisco 4-5 years ago many more on work in the company, he said. According to Sparrou, at office Cisco in Russia there is a lot of new employees.
|If to look at a pyramid of the organization - from the CEO to non-management employees, our pyramid is very well balanced. We have very vigorous young team, - the vice president of Cisco in Russia and the CIS noted.|
For example, according to TAdviser, one and a half years ago Dmitry Leshchinsky held a position of the director of work with commercial customers in the Russian Cisco. Alexey Perevyazkin then held a position of the director of work with corporate customers. The last in structure of Cisco are meant as the most big customers. Earlier these employees held other positions in the company. Many changes happened at the level of associate officers.
The top manager of Cisco added that the company has a good program of training of managers on sales according to which the Russian employees are trained in Europe, in Amsterdam. It is possible to see a difference in work of the employees who were trained according to this program, Johnathan Sparrou noted.
According to Sparrou, macroeconomic stabilization and relative stability of ruble became one of factors of improvement of sales of Cisco: during this period there were no so drama jumps of currency rates as earlier.
During the periods of economic instability customers are inclined to postpone purchases of IT products, the representative of Cisco therefore the appeared predictability of an economic situation positively affected sales noted. According to Sparrou, the company began to see this return to normal business in 2016.
One more factor is a focus of the Russian companies on digital transformation, Sparrou noted. The companies see need for digitalization, improvement of business processes and extraction of the maximum advantage from data analysis.
Sales growth in Russia was promoted also by focus of Cisco on increase in local production. Cisco intends to expand production of products on which the greatest demand is observed in Russia. Global Cisco noted earlier that in such complex market as Russia with its economy decreasing against the background of sanctions existence of local production helps to smooth a situation: thanks to it Cisco "perceive as more than the local player" (in more detail here).
Against the background of sanctions of the West against Russia you will also lock U.S. authorities for the American companies for work with a number of the organizations in Russia, the client landscape of Cisco in Russia looks now as follows: corporate customers, state customers and the companies with which Cisco cannot work.
|We treat it very strictly. In business the most important is a trust, and we did not begin to play games "what it is possible to think up what scheme" for clients with whom we cannot work as it against trust. We fairly speak to them "no", - Sparrou said.|
Growth of revenue in rubles
The company conducts activity in Russia through two legal entities.
Revenue of the first of them - Cisco Solutions in 2018 increased by 18%, having reached 29.8 billion rubles. The similar indicator of the second - Sisko Sistemz changed for 13% downward, having reduced to 2.06 billion rubles.
Thus, total revenue from activity of corporation in Russia increased by 16%.
Net profit Cisco Solutions in 2018 grew to 2.7 billion rubles against 1 billion the previous year, Sisko Sistemz - to 158.5 million rubles against 61.6 million in 2017.
It is also interesting to note that for 2018 Cisco did not sign any direct contract with state companies in Russia (223 Federal Laws). Directly the American corporation did not work with departments (44 Federal Laws) also in previous years.
CB Strelka and Cisco agreed jointly to develop solutions of "The smart city" in Russia
CB Strelka and Cisco announced on October 11, 2018 agreement signature about intentions according to which the companies are going to develop jointly solutions on the Smart City direction, including regarding their localization in Russia. Read more here.
Wendy Mars is the new head of office in EMEA
Cisco because of sanctions of the USA can deprive of Akado of technical support
The Cisco company because of sanctions can stop support of a system of conditional access of Akado, reported to Vedomosti two sources familiar with managers of Akado. According to one of interlocutors of the edition, technical support can be stopped in June, 2018.
As you know, on April 6 Victor Vekselberg and Renova were entered by the Ministry of Finance of the USA in the sanctions list. Thus, any company cooperating with them itself risks to fall under sanctions of Washington now.
As of May, 2018, Akado uses the system of conditional access of production of the NDS company purchased by Cisco in 2012, reported the source close to managers of Akado, and the employee of developer company of such systems. According to them, the system of conditional access codes a signal which the provider transmits to the set-top box (Set-top box, STB) of the subscriber, allowing it to watch only those channels for which he paid, and actually protects content from unauthorized access and piracy.
Failure in technical support is terrible not so much — the system of conditional access can do without it for months how many failure in such system, the CEO of Iskratelekom company Alkhas Mirzabekov is convinced. According to him, as a result of failure or users can be left without television, or the company — without paid users. Anyway the operator will lose a part of a subscriber base and income from paid TV.
Change change of supplier of a system of conditional access would be an exit for Akado, Mirzabekov considers. However replacement of a system can also demand replacement of subscriber prefixes, experts believe. According to the estimates of the employee of the Russian developer of the systems of conditional access, change of coding will cost Akado in 600 million rubles from which the most part will go directly for replacement of STB.
Decline of product revenue by 31%
In 2016 financial year which came to the end for Cisco in July, sales of its products in Russia in dollars were reduced by 31%. It follows from the report of Cisco on form 10-K given in September to the FORM 10-K U.S. Securities and Exchange Commission.
At the Russian office Cisco at the time of the publication of material could not give TAdviser comments on annual results of sales. Earlier, in June, 2016, the senior vice president of Cisco in EMEAR region (EMEA and Russia) Edwin Paalvast noted that if to look at Russia with its economy decreasing against the background of sanctions, it represents very complex market for the company now.
Existence of local production in Russia helps to smooth somewhat a situation because thanks to this Cisco "perceive as the local player more", Edwin Paalvast considers. The company aims to expand a range of the equipment manufactured in Russia, it did it and in 2016.
Revenue from sales of products on all region of EMEA, according to the report 10-K, dropped by 2%. Sales in emerging markets of the region were reduced by 11%, at the same time on rates of falling Russia was the leader. In countries of Western Europe of sale of the products Cisco grew by 1%.
The most significant sales reduction of products in EMEA in Cisco is noted in a segment of video solutions for service providers. Among market segments where the greatest drop in sales was observed, service providers and a public sector are mentioned in the report of Cisco.
In Russia 42 thousand Cisco devices with tabs of intelligence agencies of the USA are revealed
On September 21, 2016 experts from the Shadowserver Foundation group which is keeping track of activity hacker a bot networks counted the number of the network devices Cisco containing vulnerability which the American law enforcement agencies for cyber espionage in national interests could use.
It is about vulnerability of CVE-2016-6415 which as reported in Cisco, remains in the software of IOS (4.3.x, 5.0.x, 5.1.x and 5.2.x; version 5.3.0 above out of danger), IOS XE (all versions) and IOS XR (all versions) for network equipment. This vulnerability was operated by the hacker Equation Group grouping whose activity is connected directly with the National Security Agency (NSA) of the USA.
Existence of CVE-2016-6415 in routers, switches and Cisco firewalls allows malefactors to get far off a memory access where confidential information can be stored. According to Shadowserver Foundation, by September 21, 2016 more than 840 thousand devices of the American producer are vulnerable.
In Ukraine 8,514 Cisco devices containing vulnerability of CVE-2016-6415 are noticed.
Specialists of Shadowserver Foundation note that there are no proofs that products of other producers are subject to the same vulnerability, however the risk nevertheless remains.
By September 21, 2016 bug fix of CVE-2016-6415 is not released. Also in Cisco report that time methods of protection against a problem do not exist, and promised to release a patch as soon as possible.
The termination of supplies of equipment for FCS
On March 31, 2016 it became known of the termination of supplies of equipment of Cisco in the Federal Customs Service (FCS) because of the sanctions inflicted on Russia by the United States and the European Union. About it as Kommersant reports, the chief of head department of information technologies of FCS Dmitry Danilin told during the "About Import Substitution Problems in Customs Authorities and New Developments in the field of ICT" conference.
According to him, at the end of 2014 Cisco officially notified FCS on impossibility of further deliveries of products for department because of maintaining sanctions policy of the West.
|Such solution can lead to untimely service maintenance of telecommunication equipment and, as a result, increase in emergency situations — Danilin reported.|
He also noted that by the end of March, 2016 of 98% of routers and videoconference equipment in customs authorities it is the share of the solutions Cisco. Besides, 90% of the switches used in FCS and 55% of automatic telephone exchange have foreign origin.
Dmitry Danilin said that FCS looks for the equipment which will be as close as possible on characteristics to foreign solutions.
According to the edition, the fact what the American sanctions interfere with supplies of equipment of Cisco and Juniper Networks to the Russian state customers became known in July, 2014. Juniper stopped supplies of equipment in law enforcement agencies (the Ministry of Internal Affairs and the Ministry of Defence).
Considerable part of products of Cisco gets under category of so-called dual-use goods (can be used both in commercial, and in the military purposes). Sanctions prohibit deliveries of the similar equipment if the defense enterprise acts as the final receiver.
3 quarter: Decline of revenue by 14%
As it appears from the report sent to Cisco to the U.S. Securities and Exchange Commission (U. S. Securities and Exchange Commission, SEC), according to the results of three-months reporting period which was closed on April 25, 2015 revenue of the company from sale of switches, routers and other equipment and also the software in Russia was reduced by 14% in comparison with the same period of previous year. The American producer explained this regress with the economic and geopolitical problems in the country including connected with strengthening of dollar in relation to ruble. The share of the Russian business in all revenue of Cisco is not specified.
The difficult economic situation in Russia brought down Cisco sales
Earlier the head of Cisco John Chambers said that the total income including the service direction of vendor in the third financial quarter fell in Russia for 41%.
Cisco notes that they despite recession in Russia of sale of the equipment and software in all region of EMEA increased by 2%. Moreover, in developing countries of this geographical zone rise for 9% is recorded. In BRICS states quarter product revenue of the company was reduced by 6% what, in addition to Russia, reduction of business in China and Brazil affected.
In the report provided some comments concerning the information which appeared in media connected with supplies of equipment to Russia in circumvention of sanctions for the American Cisco regulator. The company announced the close cooperation with SEC and the U.S. Department of Justice in this anti-corruption investigation, having added that it will not cause to Cisco extensive financial damage as less than 2% of revenue are the share of a share of Russia and some CIS countries which this incident concerns. In 2014 financial year of sale of Cisco in Russia dropped by 24%.
Reduction of orders in Russia for 41%
During the conference call devoted to results 3 quarters of the 2015 financial year which came to the end on April 25 the head of CiscoJohn Chambers provided to the loudspeaker of order amount Cisco in a geographical section. According to Chambers, order amount in EMEA region in the 3rd quarter year-on-year grew by 2%.
"Europe began to show positive dynamics five quarters ago and since then shows the average growth expressed by unambiguous indicators. If to remove Russia, then the general growth on the region of EMEA was 4%", - the head of Cisco.
Order amount in emerging markets, except for the countries of BRICS and Mexico, grew by 6%, and in the region of the countries of BRICS and Mexico - was reduced by 6%. At the same time most of all order amount "sank" in Russia - for 41%.
At the Russian office Cisco 3 quarters did not begin to comment on TAdviser local result, having referred to the fact that by corporate rules do not announce information such in single countries.
It should be noted that in the 3rd quarter of 2015 financial year reduction of order amount in Russia was more drama: last quarter year-on-year it "sank" for 16%. Then the head of Cisco noted that in emerging markets which also Russia treats, early to expect positive changes and that on them it is possible to expect difficulties within several more quarters.
Speaking about results in other countries of BRICS for the 3rd quarter, John Chambers mentioned that in China order amount was reduced by 20%, in Brazil - for 10%. In India it, on the contrary, grew by 6%. In turn, in the Pacific Rim, Japan and China order amount in reporting period in total grew by 1%. According to John Chambers if not to consider China, then growth was 8% here.
Cisco told how sanctions harm its business in Russia
Answering questions of analysts within the Barclays Americas Select Conference conference on May 19, 2015, the president of Cisco on EMEAR region (Europe, the Middle East, Africa and Russia)Chris Dedikot told how the entered USA and Europe of the sanction against Russia complicates work of his company in this country.
In the published interpretation of this conversation Dedikot's words about what to live in conditions of sanctions are cited it was "this call" for Cisco as with their introduction "on each separate product, on each separate box", shipped to Russia, and since recent time – and to other CIS countries, it is necessary to receive the signed paper now at first.
"On each switch, on each router before it can be shipped, it is necessary to provide the signed document proving that this product has no dual purpose for application in the military purposes, - Chris Dedikot explains. – It is an administrative task, it is very burdensome".
In the circumstances deterioration in business in Russia partly restrains the fact that Cisco has local production.
"We continue to invest in Russia. We have a production here. For example, we make a line of switching products here", - the president of Cisco in EMEAR region noted.
During the conversation with analysts it expressed confidence that if sanctions were cancelled, and with them and need for supplementary administrative procedures, business of Cisco in Russia would feel enthusiasm. At the same time Chris Dedikot mentioned that he does not expect change of a situation in the near future.
The top manager of Cisco also noted that the situation in Russia, undoubtedly, is a restraining factor for growth of business of Cisco in all European region.
The scheme of a bypass Cisco of sanctions against Russia is published
In May, 2015 it became known that Cisco delivered the products to the Russian security agencies and intelligence agencies in circumvention of sanctions. Journalistswho made own investigation of activity of the company came to such conclusion. At the disposal of journalists, among other, there was an internal correspondence and documentation of the Russian representative office.
To bypass the sanctions prohibiting delivery to the Russian security agencies of dual-use products in Cisco used different schemes. So, for example, contracts were made out on Chamber of Commerce and Industry of the Russian Federation though the Russian ministries and departments of the power block were an end buyer of products of Cisco.
At the same time in the Chamber of Commerce and Industry said that did not sign any contracts with Cisco. According to the press secretary of Chamber of Commerce and Industry Olga Litvinenko, her organization is not engaged in purchase and resale of goods, and only purchases office equipment for own needs.
In turn in Cisco reported that because of features of a recording system of orders, a part of the equipment as which receiver the Chamber of Commerce and Industry was registered actually intended to the Ministry of Industry and Trade of the Russian Federation. About security agencies as final receivers of products the speech does not go, emphasized in Cisco.
Charges of attempt to bypass sanctions in Cisco absolutely reject, Buzzfeed writes. The company "strictly follows the sanctions imposed in the USA and the European Union", said in the short comment sent to the edition by the official representative of Cisco Nigel Glenni.
At the same time the authenticity of internal correspondence to which journalists of BuzzFeed refer in the company did not begin to be disputed.
Transition to independent import to the Russian Federation
On October 20, 2015 it became known of intentions of Cisco to refuse cooperation with the Russian distributors and to import the equipment into the Russian Federation independently. As a result intermediaries of the American IT giant will lose a big source of income.
According to Kommersant with reference to the informed sources, Cisco warned the partners about transition to a new business model within which the corporation will import the products to Russia through affiliated enterprise. It will be engaged in a customs clearance of the equipment and its sale for rubles.
As told the edition the employee of one of system integrators, Cisco is going to work according to the new scheme in the test mode since November, 2015, and since February the 2016th — to recommend to partners to buy the equipment from child Cisco Solutions LLC.
Transfer of a customs clearance from distributors in hands of Cisco can cause a serious financial loss to resellers CompTek OCS Distribution, Marvel Distribution and RRC which annually earned about $300-400 million from Cisco delivering solutions, the employee of one of distributors estimates. According to him, independent service of the largest customers among whom there are mobile operators of "the big three" can become the next step of corporation Central Bank Sberbank Gazprom.
The head of Croc company Boris Bobrovnikov believes that independent import of products in the Russian Federation will allow Cisco to influence market prices, however same will assign to corporation of the obligation for transportation that will demand additional expenses.
"At the same time the vendor will work with the customer all the same through partners, thus, Croc these changes will not be able to influence business" — Bobrovnikov assured.
Johnathan Sparrou is appointed the vice president of Cisco in Russia and the CIS
Since August, 2014 Johnathan Sparrou got to work as the vice president of Cisco company in Russia and other CIS countries. He is going to pay special attention in the work to further development of the relations with local state structures, partners and customers of Cisco and also the general management by activity of the company in Russia / CIS.
Cisco reported to TAdviser that after Sparrou's appointment both Bernadett Ueitman who was earlier holding this position, and the head of the Russian representative office of Cisco Sergey Chernovolenko continue to work in Cisco. Bernadett, in particular, returned to central office of Cisco in the region of EMEAR and waits for new appointment, and Chernovolenko, as before, performs management of sales specialists in Russia / CIS, told TAdviser in the company.
In December, 2014 Sergey Chernovolenko left Cisco Russia and since January, 2015 was appointed the CEO of Xerox Eurasia.
Drop in sales of products for 24%
The sales volume of the equipment and the software of the American company Cisco Systems in Russia in 2013-2014 the financial year which came to the end on July 26 dropped by 24%. Such data contain in the annual report of the company submitted to the Commission of the USA on securities and the exchanges.
Among all regions of EMEA (Europe, the Middle East and Africa) sales of products fell in Russia most. Sales reduction in EMEA without the Russian market made 2%, and with its accounting — 4%. Sales of Cisco in BRICM countries (Brazil, Russia, India, China, Mexico) decreased by 11%.
The staff of Transtelecom was suspected of corruption communication with Cisco
The Transtelecom operator as one of the Russian customers of Cisco company could participate in corruption schemes. According to the results of own investigation the famous journalist Aram Roston who published article on the website Buzzfeed.com reported about it.
Roston is the author of Newsweek, New York Times, Guardian, Observer, Nation and other editions. Working in CNN, he directed department of investigations. In 2010 Roston was awarded with a professional prize of Daniel Pearl Award for article in the Nation magazine "As the USA finances Taliban ("How the US Funds the Taliban"). Besides, the journalist has two awards of Emmy and an award for reportorial investigation.
The Russian office Cisco (Cisco Systems LLC) drew attention of the journalist after the beginning of a political crisis around Ukraine - as one of the leading suppliers of telecommunication equipment in Russia. Besides, the Russian representative office of Cisco is interesting in connection with investigation which is made around it by head company Cisco at the request of the American Securities Commission (SEC) and the U.S. Department of Justice.
U.S. authorities initiated investigation of work of the Russian office Cisco
In Cisco company there takes place internal investigation about activity of the company in Russia. Investigation is initiated at the request of the American Securities Commission (SEC) and the U.S. Department of Justice. Mentioning of this investigation contains in the corporate blog by Roxane Marenberg, vice president of corporation concerning observance of standards (Compliance Systems).
As she writes in the blog, investigation concerns questions of business activity and "practice of discounting" by Cisco in Russia and other CIS countries. The company cooperates with both government agencies initiating trial and shares with them results of investigation.
Despite the width of investigation, Cisco has no reasons to believe yet that activity of the company in Russia was connected with violation of the law, Roxana Marenberg notes.
CNews requested SEC about the purposes and details of investigation, however, SEC refused comments. The Russian and American offices Cisco could not answer questions of CNews on an investigation subject.
Sergey Chernovolenko replaces Pavel Betsis at the head of business in Russia
Sales reduction for 30% in the first financial quarter
Cisco Systems sales volume in Russia dropped by 30% in comparison with 2012, reported in the company, commenting on results for the I quarter 2013-2014 financial years which ended on October 26. Revenue in developing countries which, in addition to Russia include Brazil, Mexico, India and China was reduced by 21%. Absolute values in the company were not disclosed.
"I never saw it", - the CEO of Cisco John Chambers said. According to him, customers in the specified states took additional precautionary measures because of an unstable economic situation, rate fluctuations of currencies and other factors.
In addition, disclosure of information on activity of the U.S. National Security Agency had an impact on results of Cisco, recognized in the company. In recent months this subject draws a lot of attention. In particular, the Washington Post edition wrote that the American technology companies cooperate with investigation.
2011: Growth of revenue by 63%
The Russian revenue of Cisco Systems grew in 2011 financial year (came to the end on July 31, 2011) by 63%, reported. Russia became first in the world in growth rates of sales of the infrastructure equipment of Cisco. The Russian IT market, according to the Ministry of Telecom and Mass Communications, added 14% in 2010.
Cisco does not open absolute revenue in Russia. According to a source, close to the company, it earned in a year more than $700 million here.
On sales growth Russia comes to the 1st place for the first time at least for the last five years, the representative of Cisco Alexander Palladin notes. In the first years of work in Russia growth could be above, but it was growth from scratch and the market was not such competitive, he says. Palladin explains rapid growth with the favorable market situation and also the fact that since 2009 Cisco itself delivers the equipment to the Russian customs: it reduced terms of shipment and increased the speed of turnover of products.
Croc increased sales of the equipment of Cisco in 2010 by 50%, the director of the department of telecommunications of this IT company Natalya Dyakonova says to Vedomosti. According to her, demand of big customers postponed because of crisis has an effect. In crisis of sale of Cisco decreased slightly more, than at other producers, but and grew then slightly more, including thanks to logistic reform, Dyakonova notes.
And CTI have sales of solutions of Cisco in a year, from August, 2010 to July, 2011, more than doubled, the CEO Oleg Shchapov says it. One of the reasons — the pent-up demand, agrees it; others — significant growth in investments into IT from retailers and banks, orders from new productions (especially with foreign participation) and the investments of telecom operators which grew "many times".
The Russian sales actively grow also at other producers, just Cisco appeared in Russia one of the first and its equipment already costs on a set of networks of Internet access which are now upgraded, the technical director of "Akado-stolitsy" Mikhail Medrish explains.
- According to a research of IDC analytical company, in 2010 Cisco share in the market of hardware of data protection in Russia made 28.5%, having almost twice exceeded indicators of the closest competitor. In 2010 the solutions protecting from different network threats including viruses, spam, hearts and botnets became the most popular developments of Cisco among the domestic companies.
- In February, 2011 in an interview of CNews Andrey Habarov and Aydar Garipov told about the changes which happened to arrival to the company of the new CEO about the new practice of discounts allowing vendor to lobby the necessary partners and about interest in Cisco from law enforcement agencies.
- In June, 2011 Cisco Systems LLC obtained the license of FSB of Russia for distribution and maintenance of cryptographic (cryptographic) tools. The license is granted for a period of 5 years. Now the company can render a full range of services in sale, lease or providing in leasing of own cryptographic equipment and on its subsequent maintenance in the territory of Russia according to all regulatory rules. Before could perform this activity of Cisco Systems only through the partners. According to order of the Government of the Russian Federation No. 957 of December 29, 2007 "About the statement of Regulations on licensing of the separate types of activity connected with cryptographic (cryptographic) tools", also the hardware and software, systems and complexes implementing algorithms of cryptographic information transform and intended for data protection by its transfer on communication channels and (or) at its processing and storage belong to means of enciphering hardware, program. This category includes Cisco equipment with K8, K9 codes and hardware accelerators, for example, AIM-VPN. Such solutions are widely used in small and medium business, when carrying out financial transactions and transactions and also at cross-border information transfer. Process of licensing took place according to regulating documents of FSB of the Russian Federation and confirmed that Cisco Systems LLC meet all requirements for presence of skilled staff, certificates of products, accounting systems and the special premises for information storage.
- On September 29, 2011 it became known that the vice-chairman of the State Duma Committee on Constitutional Legislation and State Development Alexander Kulikov sent a request to the State Office of Public Prosecutor and the Ministry of Internal Affairs with the requirement to deal with activity in Russia of the American corporation Cisco and if necessary to bring criminal case concerning the management of the Russian representative office - "The American partner Skolkovo is accused of corruption".
According to the deputy, the Russian representative office of Cisco officially and formally does not conduct a business taxable activity in Russia and does not pay taxes. At the same time Cisco performs large supplies of equipment and also an extensive marketing and lobbist activity in the territory of the Russian Federation therefore the corporation turned into one of key contractors on informatization and computerizations of authorities of the Russian Federation and the large Russian enterprises. In particular, the FAGCI, both chambers of Federal Assembly of the Russian Federation, the Central Bank, the Federal Tax Service, the Federal Customs Service, the Ministry of Economic Development, the Ministry of Internal Affairs of the Russian Federation, Accounts Chamber, Central Election Commission and also the largest Russian companies — Sberbank, VTB, Gazprom, Lukoil, the Russian Railway, Rosgosstrakh, RUSAL, AvtoVAZ, Sukhoi airline and others use services of corporation.
Alexander Kulikov paid special attention in the request to cooperation between Cisco and Skolkovo Foundation. According to the deputy, Cisco is the largest partner and the contractor of Fund of development of development center and commercialization of new technologies (Skolkovo Foundation) and the exclusive participant of programs for upgrade.
2010: Creation of labor union
In May, 2010, having refused to participate in corruption schemes, the staff of the Russian office Cisco created labor union. Information on the violations revealed in the company, activists reported to law enforcement agencies. On the basis of these data concerning the head of office Cisco Pavel Betsis criminal case can be brought, speak in labor union. The head, meanwhile, left Russia.
The labor union at the Russian office Cisco (Cisco Systems LLC) was founded on May 24, 2010 by employees Andrey Habarov, Aydar Garipov and Vyacheslav Revichev, they told CNews. In total the organization included 17 people (total number of staff of Cisco in Russia exceeds 300 people). What one of current heads of office (interlocutors of CNews do not tell his name) pressed from Habarov for was the cause for creation of labor union to provide an additional discount for one big customer.
The discount was proved "not by realities of business of the company", Habarov says. Thereby before the manager the question of the actual short-reception of revenue by the company for the amount about $180 thousand" was raised ". Habarov refused, "having caused a lot of indignation" from the management.
The scheme which was offered the manager of Cisco means that the supplier provides a discount for the product, and the customer pays the total price - the difference, as a rule, shares between participants of the transaction, CNews on the condition of anonymity the employee of one of the IT companies explains.
Having analyzed a situation at the Russian office Cisco, activists of labor union came to a conclusion that in the company there are no local regulatory legal acts describing business processes of the company and regulating activity of employees. It, according to Andrey Habarov, gives unlimited opportunities for abuse of official position both at the level of the management, and at the level of individual employees of Cisco Systems.
By means of labor union his organizers expect to bring activity of Cisco into accord with the legislation of the Russian Federation, to protect labor rights and legitimate interests, to prevent "rolling the company in an abyss of office abuses and commercial corruption".
The staff of the Russian office Cisco who created labor union for fight against corruption methods of work achieved a meeting with the vice president of the headquarters of the company. According to Russians, the management of Cisco was frightened of development of the situation according to the Brazilian scenario where for non-payment of taxes of the company a complaint for $830 million was made, and the head of local office went to prison.
2009: Pavel Betsis headed the Russian office Cisco
In September, 2009 Pavel Betsis headed the Russian office Cisco. It released Robert Eydzhi who directed the company in Russia for 12 years from this duty. In September, 2012 Pavel Betsis is appointed the vice president of Cisco in Russia and the CIS countries.
2008: Revenue assessment in Russia - $800 million
1997: Robert Eydzhi is the head of the Russian office
- ↑ the Federal customs completely changes Cisco for Russian Eltex because of sanctions of the USA
- ↑ Vekselberg's Akado can lose technical support of Cisco
- ↑ 
- ↑ Because of sanctions of the EU and the USA Cisco Systems does not supply the equipment to FCS
- ↑ Financial Info
- ↑ of BuzzFeed#.dm6V0oKgo After Sanctions, Cisco Altered Sales Records in Russia
- ↑ of Meduza: The scheme of a bypass Cisco of sanctions against Russia is opened
- ↑ Cisco Systems is disconnected from intermediaries
- ↑ [http://www.cnews.ru/news/top/index.shtml?2014/03/31/566240 of Staff of Transtelecom
- ↑ suspected of corruption communication with Cisco]
- ↑ U.S. authorities initiated investigation of work of the Russian office Cisco
- ↑ 12,0 12,1 [http://www.vedomosti.ru/tech/news/1368871/priznanie_cisco the company#ixzz1YNHDYKWB Cisco Systems Business
- ↑ Billion it is not a pity