Balancing Act

When Kalpathi Suresh cofounded SSI in 1991, with just one center to provide Oracle and other RDBMS training, many wondered

whether his venture would succeed. It did. Today SSI has 759 training centers

spread across the country. Quite a feat, and as Suresh says," If you want

to grow, you have to aspire high". Like any IT training company, SSI too,

is going through the slowdown. With Java and eBiz losing its sheen, the company

experimented with different models and challenged the recession. With margins in

IT education becoming really thin, the company came out with a surprise that

became the most talked about M&A in the recent times. And as SSI begins this

fiscal after its merger with Aptech, we take a look at SSI’s existence.

"While the rest of the world was embracing databases like Oracle, Sybase and Ingres, we were way behind and rooted in COBOL" Kalpathi S Suresh, chairman and CEO of SSI, on why he set up shop with RDBMS training in 1991

The training face



Kalpathi Suresh and his team were looking at all possible avenues to make

the most out of the IT education market. While NIIT and Aptech competed

nationally, SSI dominated the Southern market by aggressively launching new

centers. With the urban market coming to a point of saturation, the company saw

an opportunity in emerging upcountry areas. Here, the strategy had to be

different. So in the year 2000 the company pioneered a concept called

Educational Service Providers (ESP). In the ESP model, the company identifies

the entrepreneurs and provides the seed capital to start a center, the ESP’s

typically cater to the upcountry areas where infrastructure needs to be

incubated with local expertise. Once the ESP becomes established and

self-sustaining, it turns into a franchisee. SSI claims that the ESP model was a

success and enabled it to foray into rural areas in the south where there were

no reputed IT training institutes. The year 2000-01 was also one of the best

periods for SSI, with growth soaring by 168%. With that SSI became the third

force in IT education after NIIT and Aptech.

In 2001, the going was good for SSI in the first half, and its growth rate

was the talk of the town. But still the company is not very well known in the

northern region. So it commissioned KPMG to suggest a strategy to become a major

national force in the IT education arena. KPMG in turn suggested a franchisee

led growth model for two reasons–to firm up the dwindling IT education

revenues and to expand SSI’s reach outside of South India. But, the model did

not succeed as expected because the timing was not right.

The software side



While on the IT education front, the company tried novel approaches to boost

its sagging revenues, a significant portion of its revenues also came from its

IT consulting practice. The company’s consulting and software business started

in 1999, with the acquisition of Indigo International, a company focused on

securities practice. And since then, it has grown rapidly through acquisitions.

In 2000 it acquired the US based Albion Orion to expand into North American

markets. During that time SSI and NASDAQ Global Holdings also forged a joint

venture company called Indigo Markets to offer Internet trading solutions for

stock exchanges.

Moving forward



If we look at SSI, post July 2002, the signs were obvious–on the education

side the company was struggling to keep its business profitable, but to do that,

it badly needed a turnaround. On the software front, the company needed more

offshore contracts. During August 2002, rumor mills were agog that SSI was

planning to exit the training business. But it defied all such theories and

silenced its critics by announcing its merger with Aptech in the first quarter

of 2003. Now the road ahead for the company looks more promising–education

wise it has become the most powerful group in terms of the total number of

training centers. As M Ramprasad, director, MAPE Advisory Group sums it up,

"SSI has unfolded the biggest ever consolidation exercise in the Indian IT

education industry, and the SSI-Aptech combine is uniquely positioned to grow

over the long term". But its too early to claim "happily ever after…"

Shrikanth G