The New Driver

Training business continues to dip. It has gone down 13% in revenue terms in
the last fiscal. Many large training houses have shut down a number of centers.
Small ones are fighting for survival. Why is the number of students going in for
IT training plummeting. Is it an indicator that the overall IT industry is not
in good health and heading for worse times ahead?

The most commonly used explanation is that there are a large number of
pass-outs who are waiting to get a job. This is partly true. Thousands of
software engineers are not finding job in their fields. They are either taking
up some management course or landing up in call centers, in the hope that soon
they will get into their professions of choice. This situation is snowballing
and now the number of takers for professional courses is on decline. And as soon
as this backlog is cleared, which is beginning to happen, one will once again
see a bee-line for IT training courses.

I will also call the boom in training one saw, as a bubble, which was getting
bigger and bigger and not bursting at maturity point. The lure of foreign bound
software professionals and the fallacy of unlimited number of jobs available for
IT pros was too strong to let the bubble burst at the appropriate time. The
result was that while the number of opportunities was going down, the number of
young boys and girls enlisting for IT courses, was going up.

First and foremost, let me state upfront that it is the IT industry that is
driving the training business, and not vice versa. Which means that growth in
overall industry is followed by growth in training business. On that basis, it
is safe to claim that the lull in IT industry in the last few years is now being
followed by a slowdown in training business. However, there are quite a few
interesting things happening, which offset the revenue slide that one sees.

Clearly, Indian IT industry is getting stronger, and diverse too. Software
exports (which incidentally was the only thing the Indian training houses were
trying to feed) is not the only happening thing now - there is a huge domestic
market that is waking up. In lots of cases, the hardware and software vendors
have got into training. Today Microsoft, Cisco, Oracle, Novell, Red Hat all
provide training too- corporate courses as well as student training. Vendor
provided certification course are very hot. With the domestic market picking up,
this business will become big.

Then there is the call center and BPO industry that is recruiting people by
thousands. Many of then have their training setup, but lot of them outsource
too. Once, the training companies have re-oriented themselves to cater to this
new demand, there would be once again a rush.

I would look at this slowdown in training a little differently. Earlier,
training industry was being led by software exports, and domestic market had
very little role. Now it will be the domestic market that will drive and
influence the training industry in India. This means that there will be focus on
building talent and skills other than coding. The training industry guided by
domestic consideration will be about customer satisfaction, about localization,
and about processes.

We are already seeing, for instance, an upsurge in hardware training that is
a result of the rising hardware base in the country, and the growing importance
of computers in organizations. Now that we also know that software prices are
dropping, one is likely to see lot more demand for software services for the
Indian market, which would actually be about cost effective solutions and after
sales support. Similarly, there are so many institutes imparting language and
accent skills, so that call center can service international customers.

It's a different question that how many of the big old names of training
will be interested once the market picks up, because the training business is no
longer a very high value high margin business, as it used to be, during the days
of glory.

The author is Editor of Dataquest IBRAHIM AHMAD