Resurgence Act

Ever since the company issued profit warning in the year 2000–the first one of the few big Indian IT majors to do so–the company has undergone a series of changes and restructuring. First, the company spent much of 2000-01 in restructuring and charting out new business strategies. In the same year, NIIT had set for itself a massive Rs 10,000 crore target to be achieved in six years. Consequently, the company carved out four independent business units (IBUs)–software solution, knowledge solution, education and training wing, and Project K12. 

Despite all efforts, NIIT posted a negative growth of 30% with revenues going down from Rs 1,138 crore in 2000-01 to Rs 799 crore in 2001-02. But the change triggered during the previous fiscal was on track, and in July 2002 the company announced that it was renaming its global software business as NIIT Technologies. However, the company refrained from carving out a separate company out of its software solution business. The logic behind this, as most of the NIIT top brass, including chairman Rajendra S Pawar had maintained, was to enable both the companies leverage each other’s strength.

“Synergy of the two operations has been our core strength and we do not want to dilute that,” had always been NIIT’s standard answer to any such question. Agreed. So what triggered off the NIIT board’s decision to spin off the Global Solutions Business (read NIIT Technologies) into a separate company now? The ‘spin off’ after appropriate segregation of the knowledge solution business would help both the companies have a sharper focus on their specific businesses–education and software.

As per the Board’s decision, Arvind Thakur is expected to lead the newly formed NIIT Technologies. It will also have on board presidents of NIIT’s several software subsidiaries and the presidents of the three recently acquired companies–AD Solutions and the US-based DEI and Osprey Systems.

Industry observers appreciate the decision, however, many would still like to know why NIIT took so long. This was a step that has been long overdue considering the fact that from a 80:20 ration of education and software revenue mix, the later has been contributing more than 50% year on year for almost three successive years. The official version on the ‘timing’ only says that, “with the company posting a 14% growth, 21% in software and 7% in education business, it is the best time to trigger off another round of growth.” Perhaps the last one too in the series of changes and restructuring that the company has continued with to tide over the nearly three year long spell of IT slowdown.

SHUBHENDU PARTH/CNS in New Delhi