The winning team could have the opportunity to join Cisco as founders of a new emerging technology business unit.
Depending on the value of the idea, Cisco may also invest a further $10m over three years to fund the new business unit.
Cisco said that it hopes to find new business ideas from around the world, and that it will take advantage of emerging collaboration processes and tools.
"There are large parts of the world where inventors and entrepreneurs do not have ready access to venture capital or other means of funding, but have excellent ideas," said Marthin De Beer, senior vice president of Cisco's Emerging Technologies Group.
"We want to give those innovators an outlet and a means to develop their dream. The emergence of collaboration technologies and the growth of the network are driving a rapid evolution in the way we work.
"Cisco believes that we can open up new idea pipelines by closing those geographical gaps and at the same time infuse new ideas into Cisco's culture of innovation."
The Cisco I-Prize was announced by De Beer at the opening of Cisco's Globalisation Centre East in Bangalore.
The prize is open to individuals aged 18 and older and entries will be evaluated in much the same way that Cisco assesses new internal business ideas for its Emerging Technologies Group.
Judges will consider the technology innovation as well as the business opportunity behind the idea.
Ideas should have the potential to bring in at least $1bn revenue to Cisco over a five to seven year period, and submissions must use the IP network as a platform.
In later rounds, contestants may be provided with access to a variety of Cisco collaboration tools and the opportunity to use the company's TelePresence meeting rooms in locations around the world.
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