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'The slowdown had a larger than normal impact on NIIT'

On the day NIIT, India's leading IT training and software services company, reported its worst performance ever, company CEO Vijay K Thadani, spoke to Bipin Chandran, Anjan Mitra and Surajeet Das Gupta on the corrective steps being taken. Excerpts:

How do you analyse NIIT's performance in this quarter?

The global economic slowdown has had an early and larger than normal impact on NIIT. Both the areas of NIIT's business have been impacted.

The education business, being a consumer business, has been hit quite badly. Students, opting for various courses are taking longer times to decide and are taking longer breaks.

In addition, enrolments in various courses are also down. Our international education business is also facing tough time. For example, in Malaysia, where we have large operations, has been hit and enrolments have gone down. Similarly, the software services business has also been hit.

However, the number of students' enrolments have shown a 2 per cent increase from about 109, 000 to 111, 000.

What are the corrective steps that NIIT is taking to improve performance?

We have chalked out a seven-point strategy. We have launched an aggressive customer education programme, where we will advocate the need for collage students to develop strong IT fundamentals and need for developing newer skills.

This is aimed at pulling in students into IT courses and to get the required skills to fulfill the needs when the slowdown is over.

The company is also launching new education products around new technologies like C Sharp and is upgrading the existing curriculum, besides investing heavily in retraining and re-equipping the employees. We are also upgrading the infrastructure in our various training centres.

We are also investing in building the NIIT brand. To counter the slowdown impact, we have also started to promote e-learning in a big way. Apart from that, we are also expanding the NIIT network. The reach of the NIIT centres are being expanded.

We are holding roadshows, including in the US, to tell prospective clients about our software service capabilities. The next point in our strategy is to acquire customers in areas like finance and insurance and retain them.

NIIT has taken a set of steps to improve operational efficiency and cut administrative costs. What are these steps?

We have put in a dual strategy of cutting back administrative costs, downsize operation size and focusing on just in time hiring. Implementing these measures we have saved around Rs 30 million in the last quarter.

So, you are laying off people...

No. We are not looking at retrenchment to cut costs. It is true that our manpower base has come down to 4,317 this quarter from 4,608 in the beginning of the year. But this has been done by not replacing those vacancies, which have been created through normal attrition.

The growth of NIIT's software services business has slowed down registering just 6 per cent this quarter. What corrective steps are being taken?

We have identified areas like finance and insurance and legacy management as some of the major areas of focus. We are expecting the share of these areas in our overall revenues to go up.

At the same time we are de-risking our business from certain areas. For example, we are getting out of the product distribution business and system integration business in the Middle East.

We have also intensified marketing efforts in the US and Europe, created centres of competence in technology areas, while building process capabilities in preparation of the revival.

How do you anticipate NIIT performance after the slowdown?

It is very difficult to predict the exact nature of the company's performance at the end of the slowdown. We are expecting the operating profits to be down by about 40 per cent for the year 2001 ending September.

But we are aiming to emerge as the leader in the learning business and become a tier-one services provider in the software services business. All our efforts and investments in these areas are towards this goal.

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