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IT services, software development go hand in hand - Views on News from Equitymaster
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  • May 3, 1999

    IT services, software development go hand in hand


    • NIIT, promoted by the HCL (Shiv Nadar) group, is involved in IT training, software solutions and multimedia products. It is India's second largest IT services company and fourth largest software exporter
    • NIIT commenced operations as an IT training company to become the ninth largest computer training institute in the world (by revenue), and India's leading IT trainer with 45% market share, training approx. 100,000 students every year, with an alumni base of more than 600,000 students. In all it has over 750 training centres, of which more than 30 are overseas (17 countries) concentrated in Asia and Africa. The company's management has reduced risk and capital investment in its training centres by employing franchisees (more than 500) as a preferred way of expansion.
    • Its other business is providing software solutions, which it commenced in the mid-1980s as a software trading business. Over the years, this business has evolved into systems integration and applications software development. 
    • In multimedia products,NIIT develops and sells own-brand, computer based educational products, and develops products for third-party vendors.
    • NIIT is currently rated SEI Level 3 for software solutions. The rating determines productivity and maturity of work undertaken. The company has set a target to reach SEI Level 5 by year 2000.
    • Over the years, it has developed relationships with some of the leading software companies across the world. For instance, it has sole distribution rights for Oracle, the leading database management system, and has tie-ups with 13 other companies including Microsoft (only non-US course vendor), Computer Associates (for preparing its courseware) 3Com (networking solutions), Sybase (distribution of Powerbuilder products in India), Digital Tools and Mentor Graphics Corporation, USA for reselling and distribution of products. 
    • In FY98,NIIT became the first Indian IT company to cross the Rs 1 bn mark. Software (42% of revenues) is now the single largest business, and has overtaken the contribution from IT training (40%). In future, contribution from software is expected to increase further. In any case, the software business grew much faster (52% over FY97) than the IT training business (40%). Educational Multimedia (269 titles) contributing 18% of revenues, posted 77% growth. 
    • Exports contributed 48% of revenues.
    • Y2K accounts for only 5% of NIIT's revenues. Therefore, it has lower reliance on this lucrative yet temporary source, when compared to companies like Infosys and Satyam for whom Y2K accounts for more than 20% of revenues. 
    • As yet,NIIT has had little success in moving up the value-chain, and is to prove its expertise in providing value-added services. 
    • NIIT's strategy for growth includes: 
      • Enhancing its presence in the education business by adding 100 centres every year, in India and overseas. 
      • Offering courses to training audiences beyond those that are IT-centric 
      • Tapping the enormous potential of the Internet.
    • The company plans to acquire a software company in the US, and go in for an American Depository Receipt (ADR) issue.



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    Aug 18, 2017 (Close)


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