India's largest IT training company has firmed up plans to enter the new millennium with its best foot forward. It has selected four areas for added focus viz. business application, electronic delivery system, customer relationship management and legacy system engineering.
NIIT commenced operations as an IT training company to become the ninth largest computer training institute in the world (in terms of revenues). It is India's leading IT trainer with 45% market share, training approximately 100,000 students every year and has 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.
NIIT now harbours ambitions of making its presence felt in the world's largest IT market - USA.
In the coming years, Internet, e-commerce and net-centric solutions shall form the cornerstone of NIIT's business strategy. In software, NIIT plans to achieve the Software Engineering Institute (SEI) Level 5 certification and move towards value-based pricing. One reason that why the company could be pushing for a SEI Level accreditation is the fact that other Indian software majors like Wipro and Satyam Computers have already achieved it.
In what is seen as a major realignment of strategy, NIIT now plans to evolve into a product and solutions company, from just an IT service provider. As part of its solutions strategy, NIIT has plans to deliver full-fledged solutions for any project in less than 90 days.
The company has already commenced work in developing products in the customer relationship management segment has drawn up plans to tailor products for different vertical market segments like software, engineering and banking in the future.
Unlike their western counterparts like Microsoft (MS Office) and IBM (Lotus), Indian software companies have yet to make a mark in product development, which is at the higher end of the value chain. Infosys' foray (BANCS 2000, Webse'tu, In 2000) in product development has not proved very successful, in fact BANCS2000 - its flagship product has found it a struggle for survival over the past couple of years.
Product development puts added strain on the company's finances. Apart from the R&D costs, there is a fair degree of marketing expenditure involved. The product development process could take a while, and even after that it there could be some more time lag between the product hitting the market and actually making it big. Until the product attains a decent level of popularity, the company has to keep on incurring marketing expenditure. Despite all this, at the end of the day, the product could sink, taking with it millions of rupees and man-hours.
Analysts view NIIT's foray into product development with a certain degree of apprehension. Given NIIT's lack of experience and the track record of other Indian companies, they have put the stock on 'HOLD'.