Rank 17: NIIT:Shaken, but Not Stirred

Fiscal 2001-02 was easily the worst in NIIT’s history–through the

year, the IT training major was left gasping by the slowdown and the absolute

lack of general interest in IT courses. But what made the year particularly

forgettable was the fact that it came on the back of two years of spectacular

performance, and Rs 1,000-crore plus revenues. To drive the final nail in, the

reversal came in the year that NIIT completed two decades of existence. But

stuck to its task the IT training and software major did, and consolidation was

the flavor of the season–it floated new companies, bought out some others, and

spread its product portfolio across newer geographies. In the final count, NIIT

closed its books with revenues of Rs 907 crore (Rs 1,375 crore in FY 2000-01).

Profit after tax was the worst hit, down to a meager Rs 23.3 crore from Rs 247

crore.

Performance Highlights Despite negative growth, relative marketshare among top three players rose from 46% to 52% Realigned business to focus on key verticals First content developer in the world to be assessed at SEI-CMM Level 5 in June, 2001 Strengths Strong brand presence in IT training sector and ability to leverage it to gain marketshare Deep pockets, propelled by software and services revenues, will help buffer shocks Weaknesses Predominant ‘education sector player’ image overshadows software business Persistent slowdown in global transportation business may impact revenues adversely NIIT Ltd. l Startup: 1981 l Products & services: Software solutions, knowledge solutions and IT training l Education Centers 2510 l Address: 8, Balaji Estate, Sudarshan Munjal Marg, Kalkaji, New Delhi–110019 l Tel: 6482054 l Fax: 6203333, 6203386 l Website: niit.com

That it got bruised in the consumer-driven IT education sector was expected–sentiment

was negative and the sector saw a negative growth of 39%. What was worse was the

30% negative growth in the company’s software business, even though its

revenue mix between IT education and software business changed marginally–from

near 50:50 to 47:53. While the software exports sector, with its 20% growth, was

the savior of the Indian IT industry.

NIIT reduced the strength of its product and project implementers by 44% and

support staff by 34%, while the development division shrunk by 7%. Divisions

that saw an increase in manpower strength were sales and marketing (4%) and

R&D (13%).

And while the company got busy creating a leaner machine by adopting a

"just-in-time" recruitment policy, it improved its product portfolio

balance. Focus was shifted from new technologies to maintenance and

modernization, where companies worldwide are allocating a chunk of their IT

budgets.

On the education front, NIIT shifted gears to create finer market segments

and launch "sachet packs"–small-duration, quick-return courses. It

also launched training operations in Colombia and Vietnam, besides strengthening

its China operations. At final count, while the drop in revenues hit the

bottomline hard, it still managed to add cash to its balance sheet and close the

year with reserves of Rs 252 crore.