Cisco Systems Russia Sisko Systems

Production in Russia

Main article: Cisco Systems production in Russia

Performance indicators

2022: Loss of 5.5 billion rubles

At the end of April 2023, it became known that the Russian structures of Cisco suffered multibillion-dollar losses in connection with the curtailment of business in the current geopolitical situation.

According to CNews, referring to data from the Federal Tax Service collected according to Russian accounting standards (RAS), two Russian subsidiaries of Cisco, Cisco Solution LLC and Sisko Systems LLC, suffered losses. In particular, the first of the named companies in 2022 recorded net losses of 3.67 billion rubles. For comparison: a year earlier, net profit was demonstrated at 1.16 billion rubles. The Cisco Solution LLC in 2022 amounted to 5.15 billion rubles: this is 84% less than in the previous year, when the figure was 33.92 billion rubles.

In the ranking "TAdviser100: The largest IT companies in Russia 2023," such revenue indicators allowed Cisco Solution LLC and Sisko Systems LLC to take 88th place.

Sisco Systems LLC, in turn, suffered net losses of 1.8 billion rubles in 2022, while in 2021 the losses amounted to 102.4 million rubles. The revenue of this enterprise on an annualized basis decreased by 76% - from 1.85 billion rubles in 2021 to 441.2 million rubles in 2022.

In earlier years, the profitability of the organization [Sisko Systems LLC] was also on average zero, which allows us to conclude that for Cisco in Russia this legal entity was of auxiliary importance, and the main thing, apparently, was the aforementioned Cisco Solution LLC, - said in the publication CNews.

If we consider two Russian Cisco structures combined, then their total net losses in 2022 amounted to 5.47 billion rubles. A year earlier, these enterprises brought more than 1 billion rubles in net profit. Significant financial losses are explained by the destruction of equipment in Russia for 1.86 billion rubles, as well as payments of compensation and deductions in connection with the termination of employment contracts with personnel.^[1]

2021: Revenue from Cisco's Russian office has grown in recent years, but fell in 2021

According to the Kontur. Focus service, the revenue of Russian legal entities Cisco in 2021 decreased by 3.7%, from 37.1 billion to 35.8 billion rubles. This indicator consists of the revenue of two Russian subsidiaries of the Dutch Cisco Systems Netherlands Holdings B.V. - Cisco Solutions and Sisko Systems. In the ranking TAdviser100: The largest IT companies in Russia 2022, Cisco 20 took 20th place. The total revenue of Cisco Solutions and Sisko Systems from the financial statements for 2020-2021 was taken into account. excluding VAT.

Moreover, if Sisko Systems, which is responsible for equipment maintenance, grew revenue by 5.1%, then Cisco Solutions, which is engaged in centralized distribution and generates the main cash flow, decreased by 4.2%. The revenue of Sisko Systems at the end of 2021 is 1.8 billion rubles, Cisco Solutions - 33.9 billion rubles.

The profit of Cisco Solutions for the year decreased by 23.4%, from 1.5 billion to 1.2 billion rubles. In 2021, Sisko Systems showed a net loss of 102.4 million rubles.

Cisco Solutions were created in 2013 to maximize profits from the Russian market, before that, Cisco Systems equipment was imported into the country by four accredited partners - Marvel Distribution, RRC, OCS Distribution and Lanit. From 2016 to 2020, the company's revenue grew annually and in five years increased 2.4 times, from 14.9 billion to 35.4 billion rubles.

It should be borne in mind that some contracts for the supply of Cisco equipment are not concluded for Russian legal entities, but at the global level. And such transactions are not reflected in the company's Russian statements. Certified partners are engaged in equipment maintenance in Russia.

Moreover, the quarterly ^[2], published on January 29, 2022, says that the company's business in BRICM developing countries (Brazil, Russia, India, China, Mexico) has grown by 14%, while revenue is growing in each individual country with the exception of Russia.

In the summer of 2021, Andrei Kuzmich, Director of Technologies at Cisco Russia and the CIS, ^[3], which for several years in a row Russia is recognized by one of the most successful regions in the world within Cisco. So, at the end of 2018, Russia was recognized as the best in the world in terms of growth, in 2019, despite the general decline in the economy associated with the Covid-19 pandemic, it was the best in Europe. According to him, even the restrictions that are imposed on the Russian office of Cisco and restrain development do not interfere with business growth, as the IT industry in the country is developing rapidly.

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History

2023

Liquidation of Russian Sisco Systems LLC

On December 15, 2023 American , the manufacturer of network equipment software Cisco and finally liquidated the Russian legal entity. This procedure is related to the company's decision to completely leave the Russian market against the background of the current geopolitical situation.

According to TASS, Sisko Systems LLC, which was engaged in equipment maintenance in Russia, has been abolished. As of the specified date, Cisco has a second legal entity in the Russian Federation - Cisco Solutions, whose specialization was distribution and sales.

The decision to liquidate Sisko Systems was made on June 19, 2023 at an extraordinary general meeting of the company's participants. As part of the procedure for leaving Russia, Cisco destroyed its material and production assets in the amount of almost 3 billion rubles. The company said this was necessary due to "the termination of sales and suspension of Cisco licenses and services, as well as the impossibility of re-export."

In early 2023, Cisco replaced the head of Sisko Systems and Cisco Solutions. In particular, from January 25, Natalya Goryushina was appointed to the post of head of Sisko Systems, who replaced Jonathan Sparrow in this post (she headed the company's representative offices in Russia and the CIS since 2014). In addition, Goryushina became the head of Cisco Solutions LLC. And in early April 2023, Cisco reduced the staff of Sisko Systems to five employees, while 2021 people worked in this organization 60 year. According to the financial statements, the management of Sisko Systems in 2022 terminated most of the employment contracts with its employees by agreement of the parties. The total amount of payments to employees, as well as the cost of mandatory contributions to extrabudgetary funds as part of the reduction in staff amounted to approximately 190.6 million rubles.^[4]

In June 2023, it became known for the first time that Cisco began the liquidation of the Russian LLC Sisko Systems.

Destruction of equipment for 1.86 billion rubles

In early April 2023, it became known that Cisco, leaving Russia, physically destroyed products worth almost 1.9 billion rubles. Such information is contained in the reports of the Russian subsidiary of the American manufacturer of network equipment.

The reserves were physically destroyed in January 2023, in connection with which, as of December 31, 2022, a reserve was accrued to reduce the value in the full amount of the value of the reserves - 1,864,002 thousand rubles, - said in the document of the company "Sisko Systems," an excerpt from which leads "RIA Novosti."

It also follows from it that the company made the decision to dispose of it back in August 2022 due to the termination of sales and the suspension of Cisco licenses and services in Russia. The decision was also influenced by the impossibility of re-export

Inventory refers mainly to operating spare parts for equipment purchased under an agreement with the Dutch structure - Cisco Systems International B.V. In addition to spare parts, the main assets of the Russian division were destroyed - vehicles, office furniture and equipment, as well as demonstration equipment totaling 1 million rubles.

The documents noted that Sisko Systems LLC from June to August 2022 terminated employment contracts with most of the team in the Russian Federation. As a result, the company had to pay employees and extra-budgetary funds about 191 million rubles. As of the end of 2022, five people worked in the Russian division. At the end of 2021, the team consisted of 60 people.

Sisko Systems is just one of several Russian Cisco subsidiaries. Founded in 2006 in Moscow and having an authorized capital of 11.45 million rubles, the company is 99.99999% owned by the Dutch representative office of Cisco. The share of 1 rubles is owned by the Cisco structure registered in Bermuda (data from the Unified State Register of Legal Entities by April 2023).^[5]

The company's equipment in Russia is available despite all US sanctions

The United States recognized the extremely low effectiveness of bans on the import and use of Cisco equipment in Russia. The network hardware of the American brand is still available on the Russian market, despite the entire wall of sanctions that the US authorities built with the direct participation of Cisco itself, The Wall Street Journal wrote in February 2023.

2022

Cisco blocked client devices in Russia and disconnected them from cloud services

In early November 2022, it became known that Cisco had blocked Meraki equipment in Russia and disconnected them from cloud services. Read more here.

Information about Cisco's plans to return to the Russian market

On October 19, 2022, it became known about Cisco's plans to return to the Russian market. According to Izvestia, we are talking about the supply of products through an intermediary - IBS can become a distributor.

According to the source of the publication, IBS for a long time the key partner of the American company Russia in and will probably be responsible for the distribution of solutions of the American corporation. Deliveries are possible directly, since on April 7, 2022 Ministry of Finance USA , he removed telecommunications equipment from the sanctions, the source explained.

The likely decision to maintain business in Russia may be due to the financial losses of the corporation, R-Style SoftlabLev Frenkel, CEO, told Izvestia. He stressed: after leaving the country, Cisco lost $200 million in profit for the quarter. This amount does not put the company on the verge of bankruptcy, but may force it to reconsider plans for the development of its products, explained Lev Frenkel.^[6]

Cisco is well aware that leaving the market does not mean leaving its products from the market. That is, products are still bought and activated in some other way. And much more correct for business and for retaining market share is to somehow return back. Let it not be directly, as it was before. There is nothing surprising that they can resume deliveries to Russia, no, "said Sergey Polovnikov, head of the Content Review analytical agency.

Deputy head MinpromtorgaVasiliy Shpak   October 19, 2022, he announced that Cisco should not return to the telecom equipment and software market in  Russia, instead of it, domestic companies should occupy a niche.

He also pointed out that Russia needs to form a request for Russian electronics with domestic software in order to achieve technological independence.

This niche should be occupied by our manufacturers, - concluded the deputy head of the Ministry of Industry and Trade.

Russian companies cannot renew licenses for Cisco and IBM equipment

As it became known at the end of May 2022, Russian companies using Cisco and IBM equipment cannot renew licenses for previously purchased equipment from these manufacturers. We are talking about licenses that must be purchased to activate new equipment or to continue the work and maintenance of previously purchased.

The fact that Cisco and IBM products were left in Russia without licenses is written by Vedomosti with reference to a representative of one of the distributors and a representative of a large Russian IT company. The latter told the publication that companies in Russia most often acquired licenses for a year, much less often - for two or three years. After the expiration of previously purchased licenses, the devices will stop working, the source added.

The publication says that Russian IT companies and integrators cannot renew or obtain new licenses for optional services and service contracts SmartNet for Cisco switching equipment, as well as for server DSS and architecture-based solutions from IBM. IBM Power

Market experts believe that with the help of parallel import schemes, these problems cannot be solved, since vendors do not sell contracts through third parties, and according to the terms of use, when detecting hacked devices or with modified unvalidated firmware, the manufacturer may try to remotely disable them.

According to one of the interlocutors of the publication, the companies left without licenses have two ways: to use a key purchased unofficially, that is, through parallel imports, or to launch programs that emulate activation, to hack equipment. In the first case, the key can be blocked by the manufacturing company, in the second there is no guarantee that the equipment will work.^[7]

Announcement of the curtailment of business in Russia

On June 23, 2022, Cisco announced the curtailment of business in Russia and Belarus more than three months after the cessation of sales of products and services in these countries.

The company first informed Reuters about Cisco's departure from the Russian and Belarusian markets. The network equipment manufacturer then confirmed this information on its official website.

We decided to start a systematic curtailment of business in Russia and Belarus... We will directly contact customers, partners and suppliers to resolve our financial issues, including reimbursement of prepayment for services and software, Cisco said.

The company promised support to its employees in Russia, Belarus and Ukraine. At the same time, Cisco did not specify what kind of help employees will receive.

Cisco is still trying to use all its resources to help our employees, structures and residents of Ukraine, as well as our customers and partners in this difficult time, the American IT corporation said.

As the Telecompaper edition wrote on June 17, 2022, before the start of the Russian special operation in Ukraine, Cisco delivered a large batch of equipment to the Russian Federation, and now the company is looking for opportunities to export this equipment back. The American vendor, according to the publication, plans to complete all operations related to the curtailment of business in Russia by July 4, 2022.^[8]

 Cisco employees in March 2022, after the announcement of the suspension of activities in Russia, were on paid leave for three months, a source in the domestic VKS market told CNews. Then the staff extended the vacation for another month until the end of June 2022. According to the publication, it was planned that the company's employees would officially announce the departure of Cisco from the Russian Federation on June 30, 2022. The company will declare itself bankrupt and pay employees "parachutes" (severance pay), the source said in a large IT integrator.

Losses of $200 million due to withdrawal from Russia and Belarus

In the third quarter of fiscal 2022 (the reporting three-month period ended at the end of April 2022 calendar), Cisco lost about $200 million due to withdrawal from Russia and Belarus. The American company announced this on May 18, 2022 as part of the publication of its financial statements.

Cisco noted that Russia, Ukraine and Belarus account for about 1% of all sales of the company. In February-April 2022, the IT corporation earned $12.8 billion, which approximately corresponds to the result of a year ago. It turns out that the curtailment of operations in the Russian and Belarusian markets in only three months cost Cisco about 1.6% of revenues. Learn more about Cisco's Q3 financial results and forecast for Q4 here.

The company stops business in Russia and Belarus, it will support employees, customers and partners in Ukraine<...> and will strengthen measures to protect Ukrainian organizations from cyber threats, said Cisco CEO Chuck Robbins.

By mid-May 2022, employees of Cisco's Russian office are on three months of paid leave. According to the SPARK-Interfax system, the company employs 71 people.

Despite the fact that operators have stocks of equipment, they are not endless and tend to become obsolete.

On May 18, 2022, the day of the publication of quarterly reports, Cisco shares fell in price by 13%, which was the strongest decline for the company since March 2020. Without taking into account this negative dynamics, the IT vendor's quotes have dropped 24% since the beginning of 2022, Bloomberg notes.^[9]

Employees of the Russian Cisco were sent on paid leave for 3 months

As TAdviser found out on March 5, employees of the Russian office of Cisco have so far been sent on a three-month paid vacation. This was also confirmed by a source well acquainted with the company.

According to the interlocutor of TAdviser, Cisco has suspended new sales of its products in Russia, but its local office is not closed, and the company has not left the country.

How many people work for Cisco is not known for certain. In the company itself, the exact number of people in all three of its Russian legal entities in public space do not "shine." And in large Cisco partners it is difficult to name the exact number. A representative of one of them estimates the Russian team at several hundred people.

Earlier, Cisco's global office announced the suspension of business operations in Russia, and on March 4, information about the planned disconnection of Russian users from Cisco smart accounts within 24 hours also surfaced on the Russian IT market (see more below).

Cisco disconnects its equipment in Russia. There is a way to delay blocking

On March 4, 2022, ^[10]_news, citing a letter from Cisco Systems CEO Chuck Robbins to employees, reported that against the background of a special operation by the Armed Forces of the Russian Federation in Ukraine, the company suspends all business operations in Russia and Belarus.

A Cisco source told TAdviser that Cisco, among other things, will block Smart Accounts of Russian customers in the next 24 hours. According to him, cloud services and unified communications will become unavailable as a result. Information systems will not stop working, but their functionality, which is provided for by the license, will be cut. Information about this with reference to the Ministry of Digital Development also appeared on the portal of the "Union" of the Kaliningrad Chamber of Commerce and Industry ^[11]

Cisco official confirmed the Cisco Smart Accounts lock. According to him, within 24 hours, all consumers of Cisco equipment in Russia will be disconnected from Smart Accounts. The American vendor initiates a licensing check within 24 hours.

According to the expert, in order to avoid disconnecting Smart Accounts, it is necessary to put a hard access-list with a traffic ban on the address at the exit of the infrastructure to the Internet tools.cisco.com. Having done this, the company will receive a delay in disconnection for 30-90 days, retaining in full all the functionality of the equipment.

If this is not done, the devices that require licensing and/or subscription will cease to function. There will be a stop of functionality. This will affect all security solutions (Cisco ISE, Cisco ASA), telephony and unified communications (UC), as well as software-defined networks (software-defined solutions).

2021: Inclusion in the TAdviser rating "VKS system vendors leading in the Russian market"

Sisko Systems is included in the rating "Vendors of VKS systems leading in the Russian market in terms of the number of projects implemented," prepared by TAdviser in November 2021. Read more here.

2020

Revenue growth by 11.2% to 37.1 billion rubles.

At the end of 2020, Cisco's revenue in Russia amounted to 37.1 billion rubles, an increase of 11.2% compared to 2019, which allowed it to take 16th place in the ranking of TAdviser100: The largest IT companies in Russia 2021.

The data includes the total revenues of Cisco Solution LLC and Sisko Systems LLC from the financial statements for 2019-2020 contained in the Kontur. Focus database.

2019

Sales growth in Russia by 6% in dollars

Product revenue Cisco Russia in fiscal 2019 (ended for the company on July 31) rose 6% in dollars. This is stated in the annual report of Cisco, published in October 2019.

In general, for the BRICM countries (Brazil, Russia, India, China, Mexico), Cisco's turnover from product sales decreased by 1% with a particularly strong drop in China - minus 16%. However, Russia, as well as India and Mexico, where growth was observed, made it possible to offset the negative effect, the company said in its annual report.

At the time of publication, Cisco's Russian office was unable to comment on TAdviser, which became their drivers of positive dynamics in 2019. Cisco sales in Russia began to show growth again in 2017-2018 after a significant decline. The head of Cisco in Russia, Jonathan Sparrow, previously explained the exit to the plus by a significant change of the local office team, as well as the desire for flexibility: when possible, Cisco provides "good discounts," he said.

The company noted that Cisco's focus on increasing local production also contributed to sales growth in Russia.

In Russia, the company has two legal entities that bring revenue from direct contracts: Sisko Systems and Cisco Solutions. In rubles, their total revenue in the 2018 calendar year also increased to 31.8 billion rubles. With this indicator in the TAdviser ranking, the top 50 Russian representative offices of foreign IT companies with the largest turnover Cisco took 9th place.

The total revenue of legal entities LLC Cisco Solutions and LLC Sisko Systems in 2019 amounted to 33,407,921 thousand rubles. With this indicator in the TAdviser ranking, the top 50 Russian representative offices of foreign IT companies with the largest turnover Cisco took 10th place.

Cisco sales in 2019 grew, despite the exchange rate for import substitution in Russia. It is known about the practice of replacing the equipment of the American vendor with domestic equipment during this period. For example, in March, the media featured plans FCS to replace Cisco telecom equipment with Russian solutions due to the inability of the latter to supply it to the department under sanctions^[12] to^[13]

I must say that other major American vendors are talking about growth over the past year, despite the not very simple situation in Russia. So, about the increase in business volumes told in. And in that Oracle VMware claimed their local business business in 2018 even grew at a much faster pace in dollars than the global average.

Jonathan Sparrow in an interview with TAdviser - on the digital economy and working in challenging conditions

In May 2019, Cisco Vice President for Work in Russia and the CIS Jonathan Sparrow in an interview with TAdviser spoke about plans to develop the company's business and production in Russia, as well as how it works in the difficult conditions that have developed in the country for foreign vendors.

Cooperation with HSE and Rostelecom in the field of digitalization of educational processes

On April 4, 2019, the Higher School of Economics announced that, together with Cisco and Rostelecom, they signed a five-year cooperation agreement aimed at implementing joint activities under the Digital Education program, digitalizing educational processes and training qualified specialists for the high-tech economy. The result of the signing of the trilateral agreement will be the creation of a joint educational and research Center for Digital Technologies at the Higher School of Economics. Read more here.

Agreements on the intentions of cooperation with Tyumen State University and the Russian society "Knowledge"

On March 26, 2019, Cisco announced the signing of agreements of intent for cooperation with Tyumen State University and the Russian Knowledge Society. Within the framework of these agreements, designed for 3 years, the parties will develop educational programs and implement various initiatives aimed at digitalizing educational processes and training qualified specialists for the high-tech economy.

Cisco has been involved in initiatives to train professionals for many years, " digitalization of the Russian economy says Jonathan Sparrow, Cisco's vice president of operations in Russia and the CIS. - Through "" Cisco Network Academy we support tens of thousands of young people who have decided to connect their future with high technology. After training in our program, many of them continue to develop in this professional field. I am confident that agreements Tyumen state with the university and the Russian society "Knowledge" will make a significant contribution to building a personnel foundation for a highly efficient digital economy. " Russia

Together with the public and state educational organization, the Russian Society "Knowledge" Cisco plans to promote the digitalization of the economy through the training of qualified specialists in the field of IT. Thus, the parties intend to popularize modern educational technologies and IT literacy among Russians, as well as distribute educational and educational materials "Knowledge" in Russia and beyond through the "Cisco Network Academy." In addition, cooperation between the Cisco Network Academy and the Russian Knowledge Society will become the basis for training specialists in accordance with the professional standard "Consultant in the development of digital literacy of the population (digital curator)." The digital curator is a little-known profession in Russia: the standard was adopted by the Ministry of Labor 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 get a profession on the basis of the existing Cisco Network Academies. Instructors and students will have access to educational materials developed by the Russian Society "Knowledge" for training according to the professional standard being implemented.

The agreement between Cisco and Tyumen State University opens up opportunities for internships for students and graduates at Cisco, makes it possible to organize and conduct joint presentations, seminars, conferences, round tables, develop educational and methodological documentation, conduct joint educational research, business projects, and develop IT education at the university. Thus, Cisco intends to promote the development of IT education at Tyumen State University through its Cisco Network Academy program - fundamental training courses for specialists in the design, construction and operation of communication networks.

"The upcoming era of the digital economy in Russia is possible with the synergy of various modern technologies," commented Liubov Dukhanina, Chairman of the Russian Society "Knowledge." - The signed agreement between the Russian Society "Knowledge" and Cisco is a prime example of such a synergistic effect in education and education. The planned joint activities will allow us to conduct training in modern specialties of the digital economy, as well as involve the general population in the use of end-to-end technologies both at the professional and household levels. "

The key tool for building a single educational space should be digitalization. It is important for the university to construct and fill the modern digital educational environment, - said Valery Falkov, rector of Tyumen State University. - We understand that this can only be done in partnership with world leaders such as Cisco. Therefore, we are interested in cooperation both in the field of education, science, development and implementation of professional educational programs, and in the organization of practices and internships of students "

2018

Cisco's business in Russia began to grow after a long decline

In the 2018 fiscal year (ended for Cisco in July 2018), Cisco sales in Russia for the second year in a row showed growth after the recession. Product sales increased in dollars by 10%, according to a Cisco report on Form 10-K filed with the US Securities and Exchange Commission.

Earlier, Cisco sales in Russia slowed down both sanctions and falling oil prices that directly affect the exchange rate. ruble Due to the growth of the course dollar , Cisco products for Russian customers have risen in price.

Cisco Vice President for Russia and the CIS Jonathan Sparrow explained to TAdviser in October, which allowed Cisco to achieve revenue growth in Russia. One of the most important factors in the increase in sales, he called TAdviser a significant change in the local office team. Of those who worked for Cisco 4-5 years ago, many more work for the company, he said. According to Sparrow, there are many new employees in the Cisco office in Russia.

If you look at the pyramid of the organization - from the general director to ordinary employees, our pyramid is very well balanced. We have a very energetic young team, - said the vice president of Cisco in Russia and the CIS.

For example, according to TAdviser, a year and a half ago, Dmitry Leshchinsky took the position of director for work with commercial customers in the Russian Cisco. Alexey Perevyazkin then took the position of director for work with corporate customers. The latter in the Cisco structure mean the largest customers. Previously, these employees held other positions in the company. A lot of changes have occurred at the level of junior employees.

A top Cisco manager added that the company has a good sales manager training program, which Russian employees are trained in Europe and Amsterdam. You can see the difference in the work of employees trained in this program, noted Jonathan Sparrow.

According to Sparrow, one of the factors in improving Cisco sales was the macroeconomic stabilization and relative stability of the ruble: at that time there were no such dramatic jumps in exchange rates as before.

During periods of economic instability, customers tend to postpone purchases of IT products, a Cisco spokesman said, so the predictability of the economic situation that appeared had a positive effect on sales. According to Sparrow, the company began to see this return to normal business back in 2016.

Another factor is the focus of Russian companies on digital transformation, Sparrow noted. Companies see the need to digitalize, improve business processes and get the most out of data analysis.

Cisco's focus on increasing local production also contributed to sales growth in Russia. Cisco intends to expand in Russia the production of products for which there is the greatest demand. Global Cisco previously noted that in such a complex market as Russia with its declining economy amid sanctions, the presence of local production helps smooth out the situation: thanks to it, Cisco is "more perceived as a local player" (more). here

Against the background of Western sanctions against Russia and the ban on US authorities for American companies to work with a number of organizations in Russia, Cisco's client landscape in Russia now looks like this: corporate customers, government customers and companies with which Cisco cannot work.

We are very strict about this. In business, the most important thing is trust, and we did not play "what you can think of, what a scheme" games for customers with whom we cannot work, as it is against trust. We honestly say no to them, "said Sparrow.

Revenue growth in rubles

Cisco's business in Russia in 2018 grew by 4.37 billion rubles and reached 31.86 billion rubles against 27.49 billion a year earlier.

The company operates in Russia through two legal entities.

The revenue of the first of them - Cisco Solutions in 2018 increased by 18%, reaching 29.8 billion rubles. A similar indicator of the second - Sisko Systems changed by 13% downwards, reducing to 2.06 billion rubles.

Thus, the total revenue from the corporation's activities in Russia increased by 16%.

Net profit of Cisco Solutions in 2018 increased to 2.7 billion rubles against 1 billion a year earlier, Sisko Systems - to 158.5 million rubles against 61.6 million in 2017.

It is also interesting to note that in 2018 Cisco did not conclude a single direct contract with state-owned companies in Russia (223 FZ). The American corporation did not work directly with the departments (44 FZ) in previous years.

KB Strelka and Cisco agreed to jointly develop Smart City solutions in Russia

On October 11, 2018, KB Strelka and Cisco announced the signing of an agreement of intent, according to which the companies plan to jointly develop solutions in the Smart City direction, including in terms of their localization in Russia. Read more here.

Wendy Mars is the new head of office at EMEA

At the end of September 2018, it became known about the appointment of Wendy Mars as the new head of Cisco's EMEAR representative office (Europe, Middle East, Africa, Russia). Read more here.

Cisco may deprive Akado of technical support due to US sanctions

Cisco Due to sanctions, the company may stop supporting the conditional access system, "Akado" Vedomosti two sources familiar with Akado managers said. According to one of the interlocutors of the publication, technical support may be discontinued as early as June 2018.

As you know, on April 6, Viktor Vekselberg and Renova were included in the sanctions list by the US Treasury. Thus, any company cooperating with them is now at risk of being sanctioned by Washington itself.

As of May 2018, Akado uses a conditional access system manufactured by NDS, acquired by Cisco in 2012, a source close to Akado managers and an employee of the company developing such systems said. According to them, the conditional access system encodes the signal that the provider transmits to the subscriber's Set-top box (STB), allowing him to watch only the channels for which he paid, and in fact protects the content from unauthorized access and piracy.

It is not so much the refusal of technical support that is terrible - without it, the conditional access system can do for months as a failure in such a system, says Alkhas Mirzabekov, general director of Iskratelecom. In his opinion, as a result of the failure, either users can be left without television, or the company - without paid users. In any case, the operator will lose part of the subscriber base and income from paid TV.

The way out for Akado would be to change the supplier of the conditional access system, Mirzabekov said. However, replacing the system may also require replacing set-top boxes, experts say. According to estimates by an employee of the Russian developer of conditional access systems, changing the encoding will cost Akado 600 million rubles, of which most will go directly to replace STB.^[14]

2017:20% increase in product revenue

In fiscal 2017, which ended for Cisco in July, revenue from sales of its products in Russia in dollars increased by 20%. This follows from Cisco's report on Form 10-K filed with the U.S. Securities and Exchange Commission^[15].

This time, Russia has become one of the countries that demonstrated the highest dynamics of product sales among emerging markets, according to a Cisco report. In addition to it, India showed high growth in food sales - 11% - in the reporting period, while in China, Mexico and Brazil they sank.

Previously, Cisco for several years in a row in conference calls with top managers of the company about financial results and in its reports periodically reported on the negative dynamics of revenue and order volumes in Russia.

At the time of publication of the material, Cisco's Russian office could not comment on TAdviser's annual sales results for 2017 and identify the main drivers of growth.

Global Cisco previously noted that in such a complex market as Russia with its declining economy amid sanctions, the presence of local production helps smooth out the situation: thanks to it, Cisco is "more perceived as a local player" (more here).

In July 2017, Cisco's technical director in Russia and the CIS, Andrei Kuzmich, told TAdviser that in the financial year that ended, the company significantly increased its share of sales of locally produced products in Russia. It accounted for about 20% of the volume of all products sold. The bulk of the goods sold with the "made in Russia" label were Cisco Catalyst switches and access points.

In fiscal 2018, according to Cisco's CTO in Russia, the company planned to expand the number of articles produced locally.

2016

Drop in product revenue by 31%

In fiscal 2016, which ended for Cisco in July, sales of its products in Russia in dollars decreased by 31%. This follows on from Cisco's report on Form 10-K filed in September with the U.S. Securities and Exchange Commission^[16].

At the time of publication of the material, Cisco's Russian office could not give TAdviser comments on annual sales results. Earlier, in June 2016, Cisco Senior Vice President for EMEAR (EMEA and Russia) Edwin Paalvast noted that if you look at Russia with its declining economy amid sanctions, it is now a very difficult market for the company.

The presence of local production in Russia helps to smooth out the situation to some extent, because thanks to this Cisco "is more perceived as a local player," says Edwin Paalvast. The company seeks to expand the range of equipment produced in Russia, it did this in 2016.

Revenue from product sales across EMEA fell 2%, according to the 10-K report. Sales in the emerging markets of the region decreased by 11%, while Russia was the leader in terms of the rate of decline. In Western Europe, Cisco sales grew by 1%.

The most significant decrease in product sales in EMEA in Cisco is noted in the segment of video solutions for service providers. Among the market segments where the largest drop in sales was observed, Cisco's report mentions service providers and the public sector.

42 thousand Cisco devices with bookmarks of US special services discovered in Russia

On September 21, 2016, experts from the Shadowserver Foundation group, which monitors the activity of hacker botnets, calculated the number of Cisco network devices containing a vulnerability that could be exploited by American law enforcement agencies for cyber espionage in the national interest.

This is a CVE-2016-6415 vulnerability that Cisco reported remains in IOS software (4.3.x, 5.0.x, 5.1.x and 5.2.x; version 5.3.0 and higher is out of danger), IOS XE (all versions), and IOS XR (all versions) for network equipment. This vulnerability was exploited by the hacker group Equation Group, whose activities are directly associated with the US National Security Agency (NSA).

The existence of CVE-2016-6415 in Cisco routers, switches, and firewalls allows attackers to remotely access memory where sensitive information can be stored. According to the Shadowserver Foundation, by September 21, 2016, more than 840,000 devices from the American manufacturer were vulnerable.

Most unsafe equipment (more than 255 thousand) was found in the United States. Russia in this indicator is in second place (42,281), Great Britain - in third (42,138).

In Ukraine , 8,514 Cisco devices have been spotted containing the CVE-2016-6415 vulnerability.

Shadowserver Foundation experts note that there is no evidence that other manufacturers' products are exposed to the same vulnerability, but the risk still remains.

By September 21, 2016, a fix for the bug CVE-2016-6415 not released. Cisco also reports that there are no temporary ways to protect against the problem, and promised to release a patch as soon as possible.

Termination of supply of equipment for FCS

On March 31, 2016, it became known about the termination of the supply of Cisco equipment to the Federal Customs Service (FCS) due to sanctions imposed on Russia by the United States and the European Union. About this, as reported by Kommersant, said the head of the main department of information technologies of the FCS Dmitry Danilin during the conference "On the problems of import substitution in customs authorities and new developments in the field of ICT."

According to him, at the end of 2014, Cisco officially notified the FCS about the impossibility of further supplies of products for the department due to the conduct of the Western sanctions policy.

Such a decision could lead to untimely maintenance of telecommunications equipment and, as a result, an increase in emergency situations, Danilin said.[17]

He also noted that by the end of March 2016, 98% of routers and video conferencing equipment in the customs authorities are Cisco solutions. In addition, 90% of the switches used in the FCS and 55% of the PBXs are of foreign origin.

Dmitry Danilin said that the FCS is looking for equipment that will be as close in characteristics to foreign solutions as possible.

According to the publication, the fact that American sanctions interfere with the supply of Cisco and Juniper Networks equipment to Russian state customers became known back in July 2014. Juniper has stopped supplying equipment to law enforcement agencies (the Ministry of Internal Affairs and the Ministry of Defense).

A significant part of Cisco products falls into the category of so-called dual-use goods (can be used both for commercial and military purposes). Sanctions prohibit the supply of such equipment if the final recipient is a defense enterprise.

2015

Q3: 14% drop in revenue

In May 2015, it became known about a tangible drop in Cisco sales in Russia in the third financial quarter. The difficult economic situation in the country affects.

As follows from the report sent by Cisco to the US Securities and Exchange Commission (SEC), following the results of the three-month reporting period, which was closed on April 25, 2015, the company's revenue from the sale of switches, routers and other equipment, as well as software in Russia decreased by 14% compared to the same period of the previous year. The American manufacturer explained this regression by economic and geopolitical problems in the country, including those related to the strengthening of the dollar against the ruble. The share of Russian business in all Cisco revenue is not specified.

Difficult economic situation in Russia brought down Cisco sales

Earlier, Cisco CEO John Chambers said that total revenues, including the vendor's service line, fell 41% in Russia in the third fiscal quarter.

Cisco notes that despite the decline in Russia, sales of equipment and software throughout the EMEA region increased by 2%. Moreover, in developing countries of this geographical area, a rise of 9% was recorded. In the BRICS states, the company's quarterly product revenue decreased by 6%, which, in addition to Russia, was affected by a reduction in business in China and Brazil.

In a report for the US regulator, Cisco provided some comments on information that appeared in the media related to the supply of equipment to Russia, bypassing sanctions. The company announced its close cooperation with the SEC and the US Department of Justice in this anti-corruption investigation, adding that it would not cause Cisco much financial damage, since Russia and some CIS countries concerned by this incident account for less than 2% of revenue. In fiscal 2014, Cisco sales in Russia fell 24%.^[18]

Reduction of orders in Russia by 41%

During a conference call on the results of the 3rd quarter of fiscal year 2015, which ended on April 25, Cisco CEO John Chambers presented the dynamics of Cisco order volume in a geographical context. According to Chambers, the volume of orders in the EMEA region in the 3rd quarter grew by 2% year-on-year.

"Europe began to show positive dynamics five quarters ago and since then has shown average growth, expressed in single digits. If we remove Russia, then the total growth in the EMEA region was 4%, "- the head of Cisco

.

The volume of orders in emerging markets, with the exception of the BRICS countries and Mexico, increased by 6%, and in the region of the BRICS countries and Mexico - by 6% decreased. At the same time, most of the orders "sank" in Russia - by 41%.

Cisco's Russian office did not comment on TAdviser's local Q3 result, citing the fact that according to corporate rules, information of this kind is not announced in individual countries.

It is worth noting that in the 3rd quarter of fiscal year 2015, the reduction in the volume of orders in Russia turned out to be more dramatic: in the previous quarter, year-on-year, it "sank" by 16%. Then the head of Cisco noted that in emerging markets, which include Russia, it is too early to expect positive changes, and that difficulties can be expected on them for several more quarters.

Speaking about the results in other BRICS countries for the 3rd quarter, John Chambers mentioned that in China the volume of orders decreased by 20%, in Brazil - by 10%. In India, on the contrary, it grew by 6%. In turn, in the Asia-Pacific region, Japan and China, the volume of orders in the reporting period increased by 1%. According to John Chambers, if you do not take into account China, then the growth here was 8%.

Cisco told how sanctions harm its business in Russia

Answering questions from analysts at the Barclays Americas Select Conference on May 19, 2015, Cisco President for EMEAR (Europe, Middle East, Africa and Russia) Chris Dedicot told how the sanctions imposed by the United States and Europe on Russia make it difficult for his company to work in this country.

The published transcript of this conversation cites Dedicot's words that living under sanctions turned out to be a "real challenge" for Cisco, since with their introduction "for each individual product, for each individual box," shipped to Russia, and more recently, to other CIS countries, now you must first get signed paper.

"For every switch, for every router before it can be shipped, you need to provide a signed document proving that this product does not have dual-use for military use," explains Chris Dedicot. "This is an administrative task, it is very burdensome."

In this situation, the deterioration of business in Russia is partly constrained by the fact that Cisco has local production.

"We continue to invest in Russia. We have production here. For example, we produce a line of switching products here, "said the president of Cisco in the EMEAR region

.

During a conversation with analysts, he expressed confidence that if the sanctions were lifted, and with them the need for additional administrative procedures, Cisco's business in Russia would experience an upsurge. At the same time, Chris Dedicot mentioned that he does not foresee a change in the situation in the foreseeable future.

Cisco's top manager also noted that the situation in Russia is undoubtedly a deterrent to Cisco's business growth throughout the European region.

Published a scheme to bypass Cisco sanctions against Russia

In May 2015, it became known that Cisco supplied its products to Russian law enforcement agencies and special services bypassing sanctions. This conclusion was reached by the journalists BuzzFeed^[19], who conducted their own investigation into the company's activities. At the disposal of journalists, among other things, was the internal correspondence and documentation of the Russian representative office^[20].

In order to bypass sanctions prohibiting the supply of dual-use products to Russian law enforcement agencies, Cisco used different schemes. For example, contracts were drawn up for the Chamber of Commerce and Industry of the Russian Federation, although the final buyer of Cisco products was the Russian ministries and departments of the power block.

At the same time, the Chamber of Commerce and Industry itself said that they had not concluded any contracts with Cisco. According to the press secretary of the Chamber of Commerce and Industry Olga Litvinenko, her organization is not engaged in the purchase and resale of goods, but only acquires office equipment for its own needs.

In turn, Cisco reported that due to the peculiarities of the order registration system, part of the equipment, the recipient of which was the Chamber of Commerce and Industry, was actually intended for the Ministry of Industry and Trade of the Russian Federation. We are not talking about law enforcement agencies as final recipients of products, Cisco emphasized.

Accusations of trying to bypass sanctions in Cisco categorically reject, writes Buzzfeed. The company "strictly follows the sanctions imposed in the United States and the European Union," according to a brief comment sent to the publication by Cisco spokesman Nigel Glenny.

At the same time, the company did not dispute the authenticity of the internal correspondence, which is referred to by BuzzFeed journalists.

Transition to self-import in the Russian Federation

On October 20, 2015, it became known about Cisco's intentions to abandon cooperation with Russian distributors and import its equipment into the Russian Federation on its own. As a result, the intermediaries of the American IT giant will lose a large source of income.

According to Kommersant, citing informed sources, Cisco warned its partners about the transition to a new business model, under which the corporation will import its products to Russia through a subsidiary. It will deal with the customs clearance of equipment and the sale of it for rubles.

As an employee of one of the system integrators told the publication, Cisco is going to work according to the new scheme in test mode from November 2015, and since February 2016 - to recommend partners to purchase equipment from a subsidiary of Cisco Solutions.

The transfer of customs clearance from distributors to Cisco itself can cause serious financial damage to resellers CompTek, OCS Distribution, Marvel Distribution and RRC, which earned about $300-400 million annually on the supply of Cisco solutions, estimates an employee of one of the distributors. In his opinion, the next step of the corporation may be independent service of the largest customers, including cellular operators of the Big Three, the Central Bank, Sberbank, Gazprom.

Integrators are already preparing for this, and they are starting to replace Cisco contracts, intending to offer customers equipment from Huawei, Juniper Networks, etc., one of Cisco's partners said.

The head of Krok, Boris Bobrovnikov, believes that independent import of products into the Russian Federation will allow Cisco to influence market prices, but this will impose transportation obligations on the corporation, which will require additional costs.

"At the same time, the vendor will still work with the customer through partners, thus, these changes will not be able to affect the CROC business," Bobrovnikov assured.^[21]

2014

Jonathan Sparrow appointed vice president of Cisco in Russia and the CIS

Since August 2014, Jonathan Sparrow began working as vice president of Cisco in Russia and other CIS countries. In his work, he plans to pay special attention to the further development of relations with local government agencies, partners and customers of Cisco, as well as the general management of the company's activities in Russia/CIS.

Cisco told TAdviser that after the appointment of Sparrow, both Bernadette Whiteman, who previously held this position, and the head of the Russian representative office of Cisco, Sergei Chernovolenko, continue to work at Cisco. Bernadette, in particular, returned to the Cisco central office in the EMEAR region and is waiting for a new appointment, and Chernovolenko, as before, is leading sales specialists in Russia/CIS, the company told TAdviser.

In December 2014, Sergey Chernovolenko left Cisco Russia and since January 2015 was appointed CEO of Xerox Eurasia.

24% drop in product sales

The volume of sales of equipment and software of the American company Cisco Systems in Russia in the 2013-2014 fiscal year, which ended July 26, fell by 24%. Such data is contained in the company's annual report filed with the US Securities and Exchange Commission.

Among all EMEA regions (Europe, Middle East and Africa) in Russia, product sales fell the most. The decline in sales in EMEA excluding the Russian market was 2%, and with it - 4%. Cisco sales in BRICM countries (Brazil, Russia, India, China, Mexico) decreased by 11%.

Transtelecom employees suspected of corruption with Cisco

Operator Transtelecom, as one of Cisco's Russian customers, could participate in corruption schemes. This was announced according to the results of his own investigation by the well-known journalist Aram Roston, who published an article on the website of the Buzzfeed.com^[22].

Roston is a contributor to Newsweek, the New York Times, the Guardian, the Observer, the Nation and other publications. While at CNN, he led the investigations department. In 2010, Roston was awarded the Daniel Pearl Award for an article in Nation magazine "How the US Funds the Taliban." In addition, the journalist has two Emmy awards and a Reporter Investigation Award.

The Russian office of Cisco (Sisko Systems LLC) attracted the attention of a journalist after the outbreak of the political crisis around Ukraine - as one of the leading suppliers of telecommunications equipment in Russia. In addition, the Russian representative office of Cisco is interesting in connection with the investigation that Cisco's parent company is conducting around it at the request of the US Securities Commission (SEC) and the US Department of Justice.

US authorities initiated an investigation into the work of the Russian office of Cisco

Cisco is undergoing an internal investigation into the company's activities in Russia. The investigation was initiated at the request of the US Securities Commission (SEC) and the US Department of Justice. This investigation is mentioned in the corporate blog of Roxane Marenberg, vice president of Compliance Systems^[23].

As she writes in a blog post, the investigation concerns issues of business activity and Cisco's "discount practice" in Russia and other CIS countries. The company cooperates with both government agencies that initiated the proceedings and shares with them the results of the investigation.

Despite the breadth of the investigation, Cisco has no reason to believe that the company's activities in Russia were associated with a violation of the law, notes Roxanne Marenberg.

CNews asked the U.S. Securities Commission for the purposes and details of the investigation, however, the SEC declined to comment. Cisco's Russian and American offices could not answer CNews' questions about the investigation.

2013

Sergey Chernovolenko replaces Pavel Betsis at the head of business in Russia

In the fall of 2013, Pavel Betsis left Cisco and joined Microsoft Russia. Instead, Sergey Chernovolenko was appointed head of the Russian office of Cisco.

Lower 30% sales in Q1

Cisco Systems sales fell Russia by 30% compared to 2012, the company said, commenting on the results for the first quarter of the 2013-2014 fiscal year, which ended on October 26. Revenues in developing countries, which, in addition to Russia, include Brazil, Mexico, and, India China decreased by 21%. Absolute values ​ ​ in the company were not disclosed.

"I have never seen this before," said Cisco CEO John Chambers. In his opinion, customers in these states took additional precautions due to the unstable economic situation, fluctuations in exchange rates and other factors.

In Brazil, the number of orders decreased by 25%, in Mexico, India and China - by 18%.

In addition, Cisco's results were influenced by the disclosure of information about the activities of the US National Security Agency, the company recognized. The topic has attracted a lot of attention in recent months. In particular, the Washington Post wrote that American technology companies are cooperating with intelligence.

2011: Revenue growth of 63%

Cisco Systems' Russian revenue grew 63% in fiscal year 2011 (ended July 31, 2011^[24]. Russia became the first in the world in terms of growth in Cisco infrastructure equipment sales. The Russian IT market, according to the Ministry of Communications, added 14% in 2010.

Cisco does not disclose absolute revenue in Russia. According to a source close to the company, she earned more than $700 million here in a year.

Russia is in 1st place in terms of sales growth for the first time in at least five years, said Cisco spokesman Alexander Palladin. In the first years of work in Russia, growth could have been higher, but it was growth from scratch, and the market was not so competitive, he says. Palladin explains the rapid growth by favorable market conditions, as well as the fact that since 2009 Cisco itself has been delivering equipment to Russian customs: this has reduced the shipment time and increased the speed of product turnover.

CROC increased sales of Cisco equipment in 2010 by 50%, Natalya Dyakonova, director of the telecommunications department of this IT company, tells Vedomosti. According to her, the demand of large customers postponed due to the crisis made itself felt. During the crisis, Cisco sales decreased a little more than those of other manufacturers, but then they grew a little more, including thanks to logistics reform, Dyakonova notes.

And at CTI, sales of Cisco solutions for the year, from August 2010 to July 2011, more than doubled, says its CEO Oleg Shchapov. One reason is pent-up demand, he agrees; others - a significant increase in investments in IT by retailers and banks, orders from new industries (especially with foreign participation) and increased "significantly" investments of telecom operators.

Russian sales are actively growing among other manufacturers, it's just that Cisco was one of the first in Russia and its equipment is already on many Internet access networks, which are now being modernized, explains Mikhail Medrish, technical director of Akado Capital.

• According to a study by analytical company IDC, in 2010, Cisco's share in the information security hardware market in Russia amounted to 28.5%, almost double the performance of its closest competitor. In 2010, Cisco's most popular developments among domestic companies were solutions that protect against various network threats, including viruses, spam, worms and botnets.

• In February 2011, in an interview with CNews, Andrei Khabarov and Aydar Garipov talked about the changes that occurred with the arrival of a new CEO in the company, about a new discount practice that allows the vendor to lobby the necessary partners, and about interest in Cisco from law enforcement agencies.

Cisco Russia rebel interviews: Puppeteer's dark rules

• In June 2011, Sisko Systems LLC received a license from the FSB of Russia for the distribution and maintenance of encryption (cryptographic) means. The license is issued for a period of 5 years. Now the company can provide a full range of services for the sale, lease or leasing of its own encryption equipment and for its subsequent maintenance in Russia in accordance with all regulatory rules. Previously, Sisko Systems could carry out this activity only through its partners. According to Decree of the Government of Russia No. 957 of December 29, 2007 "On Approval of the Regulations on the Licensing of Certain Types of Activities Related to Encryption (Cryptographic) Means," encryption means include hardware, software and hardware-software, systems and complexes that implement algorithms for cryptographic conversion of information and are designed to protect information during its transmission via communication channels and (or) during its processing and storage. This category includes Cisco equipment with K8, K9 codes and hardware accelerators such as AIM-VPN. Such solutions are widely used in small and medium-sized businesses, in financial transactions and transactions, as well as in cross-border information transfer. The licensing process took place in accordance with the regulatory documents of the FSB of the Russian Federation and confirmed that Sisko Systems LLC meets all the requirements for the availability of qualified personnel, product certificates, accounting systems and a special information storage room.

• On September 29, 2011, it became known that Alexander Kulikov, Deputy Chairman of the State Duma Committee on Constitutional Legislation and State Building, sent a request to the Prosecutor General's Office and the Ministry of Internal Affairs demanding to deal with the activities in Russia of the American corporation Cisco and, if necessary, initiate a criminal case against the leadership of the Russian representative office - "American partner" Skolkovo "is accused of corruption."

According to the deputy, the Russian representative office of Cisco officially and formally does not conduct commercial taxable activities in Russia and does not pay taxes. At the same time, Cisco carries out large supplies of equipment, as well as extensive marketing and lobbying activities in the Russian Federation, as a result of which the corporation has become one of the key contractors for the informatization and computerization of the authorities of the Russian Federation and large Russian enterprises. In particular, the corporation's services are used by FAPSI, both chambers of the 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, the Accounts Chamber, the Central Election Commission, as well as Sberbank VTBGazprom RUSSIAN RAILWAY Rosgosstrakh the largest Russian companies - ",," "LUKOIL,,, RUSAL, AvtoVAZ, airline" and Sukhoy others.

Alexander Kulikov paid special attention to cooperation between Cisco and the Skolkovo Foundation in his request. According to the deputy, Cisco is the largest partner and contractor of the Development Fund for the Development and Commercialization of New Technologies (Skolkovo Foundation) and a privileged participant in modernization programs.

2010: Forming a Union

In May 2010, refusing to participate in corruption schemes, employees of the Russian office of Cisco created a trade union. Information about violations identified in the company, activists passed to law enforcement agencies. Based on this data, a criminal case may be opened against the head of the Cisco office, Pavel Betsis, the union says. The leader himself, meanwhile, left Russia.

The trade union in the Russian office of Cisco (Sisko Systems LLC) was established on May 24, 2010 by employees Andrei Khabarov, Aydar Garipov and Vyacheslav Revichev, they told CNews. In total, the organization included 17 people (the total number of Cisco employees in Russia exceeds 300 people). The reason for the creation of the union was that one of the current heads of the office (CNews interlocutors do not name him) strongly demanded that Khabarov provide an additional discount for one large customer.

The discount was justified by "far from the realities of the company's business," says Khabarov. Thus, the manager was asked "the question of the actual loss of revenue by the company in the amount of about $180 thousand." Khabarov refused, "causing a lot of indignation" from the leadership.

The scheme that was offered to the Cisco manager implies that the supplier provides a discount on its product, and the customer pays the full price - the difference is usually divided between the participants in the transaction, explains CNews on condition of anonymity an employee of one of the IT companies.

After analyzing the situation in the Russian office of Cisco, trade union activists came to the conclusion that the company does not have local regulations describing the company's business processes and regulating the activities of employees. This, according to Andrei Khabarov, gives unlimited opportunities for abuse of office both at the management level and at the level of individual employees of Sisko Systems.

Through the union, its organizers expect to bring Cisco's activities in line with the legislation of the Russian Federation, protect labor rights and legitimate interests, and prevent "the company from sliding into the abyss of official abuse and commercial corruption."

Employees of the Russian office of Cisco, who created a trade union to combat corrupt methods of work, got a meeting with the vice president of the company's headquarters. According to the Russians, the Cisco leadership was afraid of the development of the situation according to the Brazilian scenario, where claims for $830 million were brought for tax evasion, and the head of the local office went to prison.

2009: Pavel Betsis heads Cisco's Russian office

In September 2009, Pavel Betsis headed the Russian office of Cisco. In this post, he replaced Robert Agee, who led the company in Russia for 12 years. In September 2012, Pavel Betsis was appointed vice president of Cisco in Russia and the CIS countries.

2008: Revenue estimate in Russia - $800 million

A top manager of a large telecommunications company estimates Cisco's revenue in Russia in 2008 at $800 million^[25].

1997: Robert Agee - Head of Russian Office

In 1997, Robert Agee was appointed head of Cisco's office in Russia.

Notes