Take Cisco's billion dollar investment in the UK with a pinch of salt, warns top IT analyst
TechMarketView chairman and co-founder of the Prince's TrustTechnology Leadership Group, Richard Holway, MBE today warned that Cisco could simply transfer innovation and job creation overseas through acquisition, which would hamper growth in years to come.
The switch company, which manufactures and supplies network equipment, yesterday pledged to spend £650 million in the UK tech sector within five years following discussions with politicians in Westminster.
Holway wrote in a blog post this morning that "there is much to welcome in the announcement", including furthering of STEM education and the assistance to UK startups.
But he warned the motivations behind the billion dollar funding may not be entirely altruistic.
"My problem comes with the realisation that most of the investment will be used to acquire UK companies. Cisco has form here with its 2012 acquisition of NDS and the 2013 acquisition of Ubiquisys. Indeed, they are currently rumoured to be a suitor for Spirent. I well recall getting hot under the collar when the old DTI classed the amount spent by overseas companies buying UK companies as 'inward investment'."
Despite Holway's concerns, he added that transferred ownership does not always spell trouble, citing the thriving automotive industry as an example.
"What I do care about is where the R&D is undertaken, where the jobs (particularly entry-level jobs) are created etc. If Cisco does that then I will be first to applaud. If it is a buy, 'rationalise' and move the good bits to the US, then I won't."
Cisco CEO John Chambers told Techworld that Cisco would be "coming to" the UK back in July. It will spend $150 million (£98 million) of the $1 billion on UK startups focusing on financial technologies, security, retail, healthcare, and smart city development.
"When we invested in France we pledged a minimum of $100 million in startup investments and you're going to see that occur as countries digitalise around the world," said Chambers at its flagship conference, Cisco Live.
It will also support the UK government's northern powerhouse initiative, through the addition of new centres of expertise, funded university collaborations, skills investments and expansion of Cisco's apprenticeship programmes.
Britain is Cisco's second largest country market, and it has 7,000 employees here. It plans to create a Central London office as well as 200 new jobs.
Of the announcement yesterday, Prime Minister David Cameron said: "This massive investment from Cisco is great news for the UK's growing digital economy and is a clear vote of confidence in our long term economic plan. It will create jobs and growth across the country, providing security for hard working people."