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