Cisco ploughs £539m into Cap Gemini

Cisco has invested $835m (£539m) in Cap Gemini, continuing its strategy of investing in big IT consulting companies.

Cisco has invested $835m (£539m) in Cap Gemini, continuing its strategy of investing in big IT consulting companies.

Cap Gemini will form a new subsidiary to offer network consulting and design, 4.9 per cent of which will be owned by Cisco.

Don Listwin, executive vice-president of Cisco, said: "This underscores the trend towards a new business model where Internet solutions are provided through an Internet ecosystem of partners."

The subsidiary will focus on service providers and large enterprises. Cisco has a similar deal with KPMG, in which it invested $1bn last year. Meanwhile, Cap Gemini is in the throes of acquiring a further 18,000 staff through its merger with Ernst & Young's consulting business, announced last month.

Cisco's approach differs from those of its rivals Lucent and Nortel, which prefer to build up their own professional services operations.

Last year, Lucent spent $3.7bn buying networking consultancy INS, which was partly owned by Cisco. Cisco retains the option to buy all of the venture with Cap Gemini if a third-party attempts a takeover.