8. NIIT: Future-perfect?

ONE of the few big Indian IT majors to issue profit warnings and accept that it would be hit by the slowdown in the US economy, NIIT spent much of 2000-01 in restructuring and charting out new business strategies. The company set for itself a massive Rs 10,000 crore target to be achieved in six years and the restructuring exercise, the third one since 1989, is aimed just at crossing this mark. The company also aims at setting up 1,000 more education centers during 2001-02, as part of its strategy to achieve global leadership position in IT education and training by 2004.

With the future targets in view, NIIT formulated a four-pronged business strategy in order to accelerate growth: a renewed focus on portfolio management as well as assessing and rationalizing the business mix; new business development and the target to generate over 30% of revenues each year from initiatives started in the previous three years; inorganic growth, and transition to new technologies. Having already attempted the implementation of Internet technologies, the company is now gearing up to put an extra emphasis on wireless, knowledge management and cognitive systems.

Under the new structure, four independent business units (IBUs)–software solutions wing, knowledge solutions wing, education and training wing and Project K-12–have been carved out. NIIT has put in place a ‘FastForward’ plan that envisages IBUs and a corporate center within the company. Quarterly meetings will review the performance of these IBUs, but otherwsie, they will function as autonomous entities.

On the performance front, while the education division was on track till Q3, Q4 felt the pinch of the slowdown in the form of a drop in fresh registrations. This led to the company switching to a massive campaign mode that would certainly impact net profit. NIIT grew at 25.5% in fiscal 2000-01, against 27% in 1999-00 and 31% in 1998-99. While 50% of the total earnings came from learning solutions, the remaining 50% came from software solutions.

Longer sales cycles and too few new business wins may affect growth in the current fiscal. Also, against the backdrop of events in the past few months, the sail may witness some rough weather as this training behemoth cruises ahead to achieve the ambitious target of Rs 10,000-crore in six years.