The Province of Ontario and networking giant Cisco Systems Inc. (NASDAQ: CSCO) signed a memorandum of understanding Wednesday, announcing a combined investment of almost a half-billion dollars in research and development facilities.
The “massive” investment will create 300 jobs in Ottawa and Toronto, said Sandra Pupatello in a press conference at Cisco’s Toronto headquarters. Cisco will spend $455 million over the next five years, while the province will chip in an additional $25 million.
Cisco CEO John Chambers called the agreement “a foundation for what we will do together.” It’s one of only “four or five” such agreements Cisco has signed with governments in his 15 years at the helm of the company, he added.
“Canada’s been very good to Cisco,” said Chambers, naming it the company’s third-largest market. He called Ontario “an amazing location in the world in terms of your IT workforce.”
The memorandum of understanding outlines an agreement between the province and Cisco to collaborate on projects in the areas of health, energy, smart communities, education and economic cluster development.
The R&D investment will focus on core routing, collaboration, data centre virtualization, cloud computing and video.
“If you’re looking in IT for the centre of the universe … this, my friends, is it,” Pupatello said.
Chambers said Cisco looks for specific conditions for investment: a skilled workforce with a solid education base; solid infrastructure; and entrepreneurial spirit in both business and government.
“We don’t move without strong, supportive government,” with an understanding there’s “skin in the game on both sides,” Chambers said.
Strong local leadership within the company is also a factor, he said, crediting Cisco Canada president Nitin Kawale.
Kawale said Cisco invests about $65 million a year in R&D in Ontario. He said the company has 1,700 partner companies with more than 8,000 employees.
“John, I am happy to tell you that our business is strong and growing in Canada,” he told Chambers.
“You can raise your first quarter forecast, then,” Chambers shot back.
Pupatello also had praise for Kawale, crediting him with leading a team in Ontario (“Well, all over Canada, but we’re the crown jewel,” she joked) that’s forged a close relationship with the provincial government.
“It’s so hard getting money out of our government,” Pupatello said.
Chambers and Kawale both gave a nod to the engineering talent in Ontario. “We will look to hire recent engineering graduates to help drive the next generation of Internet and networking technologies,” Kawale said.
Follow Dave Webb on Twitter: @cwceditor.