After installing the NetScaler virtual appliance, you must set it up to communicate with the servers.
In a NetScaler deployment, the virtual appliance communicates with servers through the Virtual Ethernet Modules (VEMs). A VEM can only interpret packets that are encapsulated with vPath service intelligence. Therefore, you must set up the virtual appliance to apply vPath encapsulation to all packets that are being sent to the server.
vPath uses overlay tunnels to steer traffic to a VSN (for example, a NetScaler virtual appliance), which can be either Layer 2 or Layer 3 adjacent. For detailed information on vPath, see "Cisco vPath and vServices Reference Guide for VMware vSphere."
Figure 1. NetScaler 1000V with Nexus 1000V