TRAINING & EDUCATION : A Near-Death Experience

Second Straight Negative Year IT Training Industry: 12-year Snapshot Top 5: The Stranglehold The Top Players Top IT Training Companies There's Life Beyond the Metros
	It was the second straight negative year–revenues dipped 23% to Rs 1,215 cr
	Top 5–which made up 72% of the overall market–saw revenues slip 7%
	Most companies had at least 55% of revenues coming from short-term courses

Despite the business process outsourcing boom, the information technology
training industry had a tough time in 2002-03, registering 23% negative growth.
The year, at best, can be called a period of consolidation, a period of
regaining some ground, which was lost in the aftermath of the 2001-02 downtime.
Stronger players built on their strengths, while smaller institutions either had
to shut shop or were taken over by bigger guns. The industry’s revenues
continued to decline, as large players witnessed lower revenues and margins.

The other highlight of the year was a perceptible shift in course
preferences, which, in turn, left training institutes with no option but to
rewrite strategies.

Change in preferences

The career segment was badly affected, as there was a decline in demand for
software development courses. Students preferred programs linked with
globally-recognized certifications, perceived to be better for finding
employment. Another discernible shift was the preference for university distance
education programs over career programs in software education. This led to
branded career programs either being scrapped or being attached with degree
offerings. Also, training centers saw a marked increase in demand for short-term
courses, as against long-term ones. Ten of the 14 companies Dataquest spoke to
registered between 55% and 100% of their revenues from short-term courses.

This changing face of the industry and the compulsion to keep pace forced
most of the major IT education players to experiment with product bouquets and
offer courses specific to the IT-enabled Services segment. This, in turn, gave a
boost to ITeS and BPO training. The change in the industry’s focus towards
improving processes and enhancing efficiency and quality levels–largely
propelled by the BPO segment–fueled demand for training programs like project
management, testing and CMM/PCMM. Again, thanks to the ITeS segment, the balance
hung in favor of soft skills training–to enhance customer relations
management, talent transformation, multitasking and knowledge and job
enrichment.

Though software training majors saw the overall training market shrink,
organizations that provide certification-linked programs like Sun Microsystems,
Microsoft, Oracle and Cisco Systems registered positive growth. IT corporate
training too ran into rough weather, with companies resorting to cost-cutting
measures. And, as employee training was low on priority lists, per-person
training rates went down drastically. The trend of conducting in-house training
programs also compounded the problem.

To stay afloat...

Due to this paradigm shift, most players were forced to explore newer
training areas to survive. Many had to rewrite strategies to be in step with
emerging trends. Others, who couldn’t do either, were forced to shut shop,
merge with or take up the franchisees of larger players. The year gone by
reinforced the fact that the mad rush for professional programming skills
training, witnessed till a few years back, had waned. This forced the industry
to focus on the fundamentals of the business, improve service levels, and create
newer products for the emerging hot areas.

The heightened demand for courses to help land jobs forced a number of
traditionally career course trainers to enter the BPO and ITeS training fray.
Those who didn’t join in and chose to retain focus on the career courses
segment had to include newer technology programs for engineers and graduates,
like embedded systems, IVRS and e-CRM, among others.

To offer newer technology training, many players entered into tieups and
alliances, while some joined hands with foreign universities to offer
globally-recognized certification courses. While many players started conducting
joint degree courses with some universities in 2002-03, some others offered
customized training modules specific to an organization’s needs. For instance,
offering an induction program for associates in the ITeS segment worked for the
National Institute of Sales; consulting in software process improvement worked
for QAI; and training in institutionalizing processes and systems and leadership
did the trick for VetriSoftware.

In some cases, like that of DatacraftAsia, the advent of new technologies in
the areas of routing and switching, network security, IP telephony and wireless
LAN opened up new revenue streams.

The urban-rural divide persists

To ride out the tough times, training institutes charged peak fees in metro
and Class ‘A’ centers, while charges decreased by between 8% and 25% in
semi-urban and rural areas. Some players like Tata Infotech offered rates that
were lower by up to 40% than those of its competitors across all sectors.

Metros and Class ‘A’ cities accounted for the biggest chunk of total
domestic revenues. However, some players like Aptech were more active in Class
‘B’ and ‘C’ cities and, accordingly, their revenues came mostly from
these cities. Though rural areas still accounted for very little in terms of
revenues from IT training, there were players like Webcomtechnolo-gies USA–which
garnered 30% of its revenues from rural areas in fiscal 2002-03. Most major
players raked in good revenues from overseas operations. The year also saw
bigger players opening centers across the globe, especially in West Asia, Latin
America and China.

Size does matter

The year gone by also saw some significant tieups and alliances among
training providers. The year saw some mergers and acquisitions too–most
notable being the Aptech-SSI merger. A new entity was formed following the
merger.

In other 2002-03 tieups, Oracle joined hands with Aptech Education. The
latter is now a member of the Oracle Workforce Development Program, and is
authorized to offer select Oracle programs at its centers. Oracle also forged a
relationship with New Horizons to provide certification programs for Oracle’s
Internet platform software, e-business suite software programs and technical
support services. New Horizons, in turn, teamed up with the Shriram Group to set
up training centers.

Those who missed the bus in 2002-03 propose to hop on in the near future. For
instance, AmitySoft is looking to tie up with good local brands in various
cities to run its training courses. CMC has plans to tie up with training
providers in the US for e-learning courses and has already signed memorandums of
understanding with universities there.

Plans on the anvil

To face the year ahead, players are planning to consolidate business
processes, particularly with regard to the increasing number of tieups with
educational institutions. Players are also turning innovative in an attempt to
attract students. For instance, Oracle plans to provide easy access to its
Oracle Certification Program by conducting mobile testing events in various
organizations. This will help professionals appear for tests without having to
visit an Oracle center.

Catch ’em young

According to Gartner, another notable growth area in Year 2003-04 will be
training institutions for children since the importance of knowing the basics of
computer operations has sunk into the psyche of the parent community.

Many state governments, especially in the south, have included computer
education in the school curriculum. Karnataka, Andhra Pradesh, Tamil Nadu and
West Bengal have been proactive and have already implemented projects on these
lines. An increasing number of state governments are realizing the benefits of
being computer-savvy and are initiating steps for introducing computer
education. And, private schools have also been proactive as far as computer
education is concerned.

In demand

Despite the present dilemma and crunch, the outlook for the IT training
industry is positive and there’s enough potential for these institutes to
survive and grow. At the current rate of growth of the Indian IT industry, there’ll
be a sizeable shortfall of skilled professionals in the next five years. As per
the findings of a Nasscom survey, the Indian IT services industry is headed for
a potential shortfall of 235,000 professionals by 2008. This will translate into
ample opportunities for training institutes as well.

Further, it is expected that new segments–most notably ITeS, biotechnology
and information security–will open up. ITeS has already stormed the Indian IT
training industry and with an increase in IT outsourcing, more demand for
skilled manpower in all related areas will be generated. This demand, in turn,
is expected to trigger training needs.

According to Gartner, "An emerging opportunity area is the BPO/ITeS
skills training area, which will range from simple call center skills training
institutions to the more complex engineering, design, international accounting
and legal services training, not to mention the opportunity to train
qualified medical doctors in remote diagnostic skills." Year 2003-04 will
see the maturing of this new area, with growth in consulting services for the
contact center industry and Six Sigma consulting and training.

There’ll be increased demand for courses offering a long-term potential and
those that help students find employment. Application across environments,
networking, software development as well as implementation, IT security,
developer skills and quality consciousness (Six Sigma) will be what the future
will hold at the higher end of the spectrum. Other high-end courses expected to
do well include programs in Smartcard or embedded systems and largescale
integration. Besides, opportunities in Linux-based training have started opening
up. At the lower end of the value chain, IT literacy programs will continue to
be in vogue due to rapid computerization in organizations big and small.

New areas like vocational courses, bioinformatics and verticals like banking
and insurance are expected to create demand for domain-specific training.
Corporate training, coupled with e-learning courses, is also expected to be a
growth area. E-learning has been talked about often, but has remained a mirage
till now. However, analysts remain hopeful that increasing Internet usage will
cause a paradigm shift in the mode of training delivery–with e-learning being
the gainer.

On the whole, three large training segments can be seen emerging–degree
programs under distance education; call center training; and international
certification education, mainly in hardware and networking. Of course, the drive
for basic IT literacy programs can only intensify.

Manjiri Kalghatgi & Neetu Katyal