STRATFOR.COM: THE GLOBAL INTELLIGENCE UPDATE
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Cisco Moves to Address Looming
IT Shortage
24 January 2001

Summary

As companies and countries lament the global shortage of skilled information
technology workers, Cisco Systems is taking matters into its own hands. In
the four
years since the introduction of its Network Academy Program, Cisco has
transformed itself into one of the largest education providers in the world.
The
company's groundbreaking approach will ensure its long-term global dominance
in
the Internet networking industry while helping to close the global
technology gap.

Analysis

While in New Delhi in early January, Cisco Systems CEO John Chambers
announced an initiative to train 100,000 Internet network professionals at
34 training
academies throughout India. The initiative is part of a groundbreaking
strategy by
the world's largest producer of Internet networking products to combat the
worldwide
scarcity of information technology workers.

The shortage of IT workers is well documented. Cisco estimated there were
800,000
global openings for Internet specialists midway through last year and
predicted the
number would rise to 3 million within the next five years. India's minister
of
information technology recently estimated the world would face a shortage of
2
million network administrators by 2005.

Europe alone will face an estimated shortage of 1.6 million IT workers by
2002. The
projected shortage is likely to undermine growth of countries and companies
alike.
According to The Associated Press, IBM Chairman Lou Gerstner told financial
analysts in a November 2000 annual meeting, "Our biggest problem in global
services today is skills."

Cisco invested $20 million in 1997 to develop the Network Academy Program,
which
has since expanded exponentially. According to the company, more than
156,000
students are enrolled in 6,016 academies in 50 U.S. states and 107
countries.
About 12,000 instructors utilize Web-based curricula to teach students how
to
design, build and maintain computer networks. To date, 10,000 students have
graduated from the program.

The growth of the full-time, eight-semester program is due both to the
demand for
training as well as to an array of partnerships with public and private high
schools
and colleges. Cisco also partners with non-profits, international
organizations,
unions and government agencies, as well as with other companies including
Microsoft, Oracle and Sun. Cisco has also teamed up with the United Nations
Development Program and USAID on a Least Developed Countries Initiative.

Stepping into the global high-tech educational void serves several purposes.
First, it
is good business. Cisco is building valuable corporate goodwill and
ingratiating itself
with governments throughout the world. This will certainly help the company
win
contracts and extend its market reach.

Furthermore, Cisco is also reinforcing its brand. The program is a way for
the
company to establish its products and services as the worldwide industry
standard.
The network administrators of the future will have been trained by Cisco, on
Cisco
products and according to Cisco protocols. Two Internet networking
certifications
already bear the company name: Cisco Certified Networking Associate and
Cisco
Certified Network Professional.

Another byproduct is increased demand. Over the long term, Cisco is
advancing the
development of Internet learning that will further the demand for its
products. Cisco
may even eventually develop a profitable business out of the e-learning
model
employed by the academies. Cisco's ambitions are summed up in its own
marketing materials, which state, "One day, training for every job on Earth
will be
available on the Internet."

What is good for Cisco is also good for the world. At least that's what
Cisco is
preaching. The academies help to lessen the IT labor shortage while helping
to
close the technology gap between the developed and developing worlds. By
locating
academies in less developed countries - such as Bangladesh, Benin, Chad and
Nepal - Cisco claims to be accelerating the progression and full integration
of these
countries into the world economy.

Benefits to the developing world should not be exaggerated, though. Critics
of
high-tech companies may argue it is cheaper to train workers overseas and
import
them using special visa programs. Considering the extent of the global IT
labor
shortage in industrialized countries and the geography of the Internet
economy,
many developing countries may find their newly minted network professionals
siphoned off by the United States, Europe and Japan. This is already
occurring in
the United States and should accelerate as Europe faces increasing
shortages.

Countries most likely to benefit from Cisco's training include India and
China, which
offer cheap but well-educated labor and are attractive to Cisco because of
their large
markets. Cisco is investing $8.6 million in India through its new academies
and
plans to use India as a principal software base. China currently has 120
academies,
compared to Germany's 89 and Japan's 88. Meanwhile, Albania, with its low
population and small resource base, has one.

Like many other aspects of the information age, the educational benefits of
the
Internet largely will bypass the developing world. Despite its Networking
Academy
Program, Albania is unlikely to emerge as the next high-tech hotspot.

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