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Crash course for infotech education companies

Bipin Chandran & D John Samuel Raja

It was one of the fastest growing areas last year, clocking around 50 per cent growth in business from Rs 17.20 billion in 1999-2000 to an estimated Rs 25 billion in 2000-01.

All that seems to be a distant memory now for infotech education & training companies. While NIIT, the country's biggest IT learning company, announced Friday a whopping 43 per cent fall in revenues from its education training business, others may not be far behind.

The gloom is spreading to companies like Zee Interactive Learning Systems, Delhi based STG Ltd and Madras based SSI, among others.

Zee Interactive saw a 20 to 30 per cent fall in enrolments in the quarter ending June over the same period last year. It is now reworking its curriculum and is planning to re-focus its courses around newer and emerging technologies for which there is demand from companies.

The company is anticipating a sharp fall in its revenues. "We were projecting a Rs 1 billion revenue for the year ending September. But with the fall in number of students, we are now expecting revenues to be down by about 20 to 30 per cent," said Dilip Mohapatra, chief operating officer of ZILS.

Delhi based training company STG, which is due to release its financial results for the quarter next week, has also seen enrolments coming down. "We are seeing enrolments coming down and this will have an impact on our bottomline," admits Suresh Nanda, CEO STG.

Madras-based SSI Ltd, however, is more optimistic. The company feels that its education business will be flat or marginally higher than that of last year. Says a company spokesperson, "The company expects that the revenue in the quarter of April-June 2001 would virtually remain the same or grow marginally from Rs 400 million last year during the same period."

SSI has not seen much shrinkage in enrolments. According to sources, SSI, which normally enrols about 60, 000 students every quarter, has not seen considerable reduction in the numbers. "The overall IT education market will shrink by about 15 per cent in terms of revenue and there will be shake-out. Only the big players will do well," the SSI spokesperson said.

Of course the second largest learning and education company Aptech is not ready to speak as its executives are all away. However, analysts tracking Aptech project a tough year for the company. Says Sachin Mohindra, director and fund manager, Chescor International, "There can be no upturn for Aptech. It is a company impacted by the lack of demand for IT education."

And reflecting on the condition of the IT learning companies Arjun Sethi, manager, A T Kearney said "due to the slowdown in the technology sector, there is pressure on the volumes of the IT training companies. "

However companies are already restrategising to tide over a recessionary market. SSI for instance will be concentrating on short-term courses and offer training on emerging technologies.

ZILS is following an opposite tack. It is concentrating on longer courses. "Short term courses, which are basically for skill enhancing is not the flavour now. We have decided to concentrate on long term courses which are carrier oriented programs," Mohapatra said adding that the company is in the process of identifying new technology areas where it can offer training.

ZILS also said that it will offer price reductions. "If there is a need, we will offer a reduction in the fee structure. The price reduction we may offer will be in the form of scholarships to students," he said."

STG is shifting its focus on industry related training than looking into the needs of individuals. According to Nanda, it is planning to concentrate on sector specific training courses. "Instead of offering general training programmes, we will be offering IT training programmes specifically targeted at various industry verticals," he said.

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