From OTTAWA Citizen 2/19/00: CISCO Expansion
From Ottawa Citizen,
Business section:
ottawacitizen.com
2 articles
TA
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CSCO expansion: 2400 jobs
ottawacitizen.com
to 2,400 new jobs
U.S. giant challenges Nortel,
Newbridge in battle for talent
Karyn Standen
The Ottawa Citizen
Cisco Systems Inc. is dramatically expanding its Ottawa
R&D facilities to strengthen its leading position in the hot
optical networking industry and attract the talent it needs
in an increasingly competitive labour market.
In plans unveiled yesterday, the San Jose, California,
company said it will add up to 600,000 square feet of new
construction at its Ottawa Development Centre -- based in
Kanata -- and create as many as 2,400 new jobs.
The move is a direct hit to Nortel Networks Corp., which
earlier this week said it will spend $260 million to add
3,600 new jobs in Montreal, Ottawa and the U.K. to boost
its production of optical systems and components. Ottawa
is expected to account for 1,000 of the new positions.
Newbridge Networks Corp. will also be a target. Its skill
at multiservice switching technology -- a technology also
under development at Cisco's Ottawa plant -- means
Cisco probably will cut into Newbridge's talent base.
While Cisco won't reveal how much it intends to spend on
expanding its Ottawa complex, the total value of its new
construction could reach as much as $90 million, said Bob
Perkins, the leasing and marketing manager for Canderel
Management Inc., which is building Cisco's new facility.
(Cisco did say construction of its first facility, a
105,000-square-foot building slated to be completed by
the end of the year, will cost $15 million).
Competition in the fibre-optics market is fierce and
growing. Along with Nortel's announcement, Lucent
Technologies Inc. of Murray Hill, New Jersey, a rival to
both Nortel and Cisco, said this week it will spend $30
million to hire at least 500 people and quadruple
production of components used in fibre-optic equipment
from two plants in Pennsylvania.
The company added it plans to unveil new, faster products
next week aimed at pushing Nortel from its No. 1 spot in
fibre-optic equipment manufacturing.
RHK Inc., a U.S.-based research firm, estimates
industry-wide sales of fibre-optic gear will jump to $21.3
billion in 2003 from $5.1 billion last year.
Cisco currently leases a 71,000-square-foot building at
365 March Rd. in Canderel's 150-acre NorthTech
Campus.
It took an option on 38 acres in the park and plans to begin
building a 105,000-square-foot facility in the spring, with
occupancy by December 2000.
The new site will house 250 employees, to be hired
between now and December, said Randy Baker, manager,
human resources at Cisco's Ottawa office.
Cisco's Ottawa staff currently numbers 230.
Cisco then plans to construct an additional five buildings
on an "as-needed basis," the company said.
Kevin Kennedy, Cisco's senior vice-president, service
provider line of business, said Cisco can't be more
specific about its building schedule.
"It (new construction) will happen over several years, and
depends on the growth of specific projects, how fast we
can hire people."
Mr. Perkins, however, said that Cisco "is suggesting
600,000 square feet will be built over the next three
years."
The Ottawa Development Centre focuses on optical
internetworking (the use of light waves to transmit data,
voice and video traffic), and supports the growth of
Cisco's multiservice switching and remote access
business units.
The company's public carrier business, which sells to
customers such as Internet service providers and
incumbent and emerging carriers, represents "in excess"
of 35 per cent of Cisco's overall business, and is growing
at 80 per cent "or better" annually, Mr. Kennedy said.
Cisco's fiscal 1999 revenues were $12.2 billion.
Expansion of its Ottawa Development Centre, which
opened last September, "demonstrates Cisco's continued
commitment to the Ottawa area as a rich source of
engineering and technical talent," Mr. Kennedy said.
It also stems from the fact that Cisco is having trouble
finding the new talent it needs closer to home.
"In order to hire enough people of the right specialities,
you have to hire outside of San Jose," Mr. Kennedy said.
Cisco's reasons for trawling for new employees outside
Silicon Valley are two-fold: venture capitalists are
pouring increasingly higher sums of money into startups,
meaning new firms are wealthy enough to compete with
established companies such as Cisco for top talent; and
the rising cost of living in Silicon Valley, (where studio
apartments can rent for $900 a month and four-bedroom
homes routinely fetch $400,000) is making it difficult for
companies such as Cisco to attract people from outside
the area.
As a result, Cisco is developing "centres of excellence"
outside San Jose -- in Raleigh, North Carolina,
Chelmsford, Massachusetts, Richardson, Texas, and
Ottawa -- to further its R&D.
Indeed, says Mr. Kennedy, "Cisco is going to be growing
as aggressively or more aggressively in our non-San Jose
sites because of the proximity to new talent pools."
Cisco's Ottawa base was established in 1997 with its
acquisition of Skystone Systems Corp.
Despite receiving 20,000 resumes a month, Cisco expects
stiff competition as it tries to recruit Ottawa workers, says
Mr. Baker.
To date, the company hires through the Internet (25 per
cent of its 230-Ottawa employees were hired after
applying for jobs posted on Cisco's Web site), at job fairs
(recruiting about three to five people per Ottawa show),
and at university campuses (Carleton University, the
University of Ottawa and the University of Waterloo are
prime hunting ground for Cisco).
About 90 per cent of its employees in Ottawa are from
Ottawa.
While Cisco makes a pitch to prospective employees
that's similar to that of rivals Nortel and Lucent,
(promoting its "cool projects, great corporate
environment, and good people to work with," along with
mandatory perks such as stock options and flexible work
schedules), Mr. Baker points to a recent survey listing
Cisco as one of the top companies to work for as evidence
it can beat out competitors for talent.
Fortune magazine last month ranked Cisco third in its
annual survey of the top 100 best companies to work for.
Lucent ranked 44th, while Nortel squeaked in at No. 100.
While Mr. Baker says he has not been given any hiring
quotas, Mr. Kennedy says interest from prospective new
employees has exceeded expectations, adding he expects
that will continue "for the foreseeable future."
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How CSCO has changed the rules
ottawacitizen.com
rules
The Ottawa Citizen
The data-networking
king's aggressive
expansion targets
Ottawa's technology
talent, James Bagnall
reports.
From the moment
Cisco Systems Inc.
thundered into the
Ottawa region in the
summer of 1997, the
rules of the game have
changed irrevocably
for the high-tech
scene.
Cisco paid nearly $90
million U.S. for a
small Nepean firm
called Skystone
Systems Corp. -- a
valuation then
considered by many to
be extravagant.
Instead, the transaction
proved the beginning
of a wave of takeovers
by all manner of
outside firms,
including New Jersey
giant Lucent
Technologies Inc. and
Sun Microsystems Inc.
of California.
Cisco's acquisition of
Skystone was also
clearly strategic.
Cisco had no intention
of buying a large, ready-made operation with all the
attendant integration risks.
Instead, the California giant told anyone who would listen
that it would use this small group of fibre-optic specialists
as a foundation for something much larger.
"I didn't get this location for just 50 or 100 people,"
Cisco's chief executive John Chambers told the Citizen in
an August 1998 interview.
"We love the area. It has a lot of very talented
telecommunications people."
Translation: Cisco would draw on Ottawa-area firms for
a lot of its telecommunications brainpower.
The company has been true to its aim, more than doubling
its workforce here to 230, thanks to the use of aggressive
recruiting techniques that other firms here have had to
emulate.
Now it's about to add half a dozen new buildings in
Kanata over the next few years and hire 2,400 new
workers.
Cisco's recruiters in particular have stressed the value of
stock options that accrue to new employees. Last fall,
Cisco had an average of nearly 21,000 shares outstanding
for each of its employees -- compared to just 3,500 for
workers at Kanata-based Newbridge Networks Corp. and
733 at Nortel Networks Corp.
These are powerful incentives, especially when you
consider the rapid and consistent rise in the value of
Cisco shares -- up 680 per cent since August, 1998, giving
it a breathtaking market capitalization of $447 billion U.S.
While Nortel's share price has outpaced that of Cisco
over the past year or so, the same is emphatically not true
of Newbridge, where employees have been growing more
susceptible to offers from elsewhere.
By unveiling a longer-term plan to vastly expand its
Kanata operation, Cisco may be laying down a giant
welcome mat for Newbridge's 3,000 plus local workers.
Cisco, a midget in the business of building next-generation
networks for telephone companies and other public
carriers, came to the Ottawa region because that's where
these massive networks are designed.
And Newbridge has more than its fair share of talented
engineers who understand how these networks are put
together.
If Cisco does manage to boost its presence here by a
factor of 10, it would instantly become one of the region's
largest and most influential technology organizations.
The region currently has about 1,000 high-tech firms that
collectively employ about 55,000. However, only a
handful of companies employ more than 2,000 locally.
Cisco's expansion will help to solidify the perception that
the Ottawa region is one of North America's pre-eminent
centres of high-tech skills -- along with Boston,
Washington, D.C., Raleigh-Durham, North Carolina and,
of course, California's Silicon Valley.
It's no accident. Next-generation communications
networks are being assembled from three basic
ingredients -- fibre-optics, voice-friendly asynchronous
transfer mode (ATM) gear and data-centric Internet
Protocol equipment.
Regionally based giants such as Nortel and JDS Uniphase
Corp. are global powers in the world of fibre-optics;
Newbridge and Nortel are top players in ATM
technology. Cisco, of course, is the IP king because its
products form much of the backbone of the Internet.
In the race to build tomorrow's voice-and-data networks,
what counts is access to brainpower. To get it, the giants
are invading each other's backyards.
While Cisco has invaded Kanata for optical- and
carrier-networking skills, Nortel and JDS have made
major forays into California by acquiring Bay Networks
Inc. and E-Tek Dynamics Inc. respectively.
California's Silicon Valley acquired critical mass as a
technology centre many years ago. Yesterday's expansion
by Cisco likely confirmed a similar transformation is well
under way here as well. |
