Market Size

Every year close to 10 lakh software – hopefuls apply for programs at education centers run by 30 odd companies in India. In money terms, that’s a Rs 2000 crore industry – one that grew at an average of 36 percent over the past five years, and one that may well be dying now. Aptech and NIIT command a market share of around 56 per cent followed by SSI, CMC, LCC Infotech, STG etc. To beat the slowdown in recent times, many of these companies have tied up with universities and institutions such as ICAI, ICWAI and government schools.

Big Fight for Space:

The IT education and training market is shrinking day by day thanks to the decimation of dotcoms and the economic downturn in most developing and developed nations across the globe. Instead of fighting a bloody battle on the street for limited space. Players are trying to consolidate their positions though mergers, acquisitions focusing attention on limited segments venturing into unexplored markets etc. (for example Aptech has nearly 260 centers outside India in 52 countries with over 90 centers in China alone). SSI with its focus on short term emerging technologies was trying to find a partner having expertise in long term program in the recent past. It struck a deal with Aptech’s promoter, Atul Nishan for acquiring 27.18 per cent equity stake in Aptech in Feb 2003. Meanwhile Tata Infotech is trying to get its feet firmly rooted in the corporate training field. NIIT is on an acquisition spree both in the education and emerging technologies field. It acquired eGurucool in Feb 2003. Cognitive Arts in Feb 2003 AD solutions in Nov 2002 Data Executives International in Sept 2002; Osprey Systems in march 2002; and Click 2 learn in March 2001 . It is trying to expand its reach through tie ups with schools, colleges, universities, government organizations operating in various part of India. As Arvind Thakur, President NIIT, expressed it in order to reorient itself and scale in the right areas, the company considered organic and inorganic growth across new geographies, market segments and services.

Strategies at work:

The demand for Java courses has dried up now. The general economic slowdown and the recession in US has drastically reduced the demand for IT professionals. The consumer sentiment has turned negative. Recruiting firms have put their plans on hold. Downsizing, cost cutting have become the new buzz words in corporate circles.

Smaller players as a result have closed shop. The big boys have stopped expanding their franchisee network. In fact, some of the owned centers of NIIT, SSI have been put up for sale. Aptech has decided to de-merge its education business from the software operations. The course fee, contents and delivery mechanisms have also changed. Unviable centers have been closed down. They have cut their staff strength also quite aggressively. A three pronged strategy is adopted to build credibility and acceptance in the eyes of both students and recruiters.

Product focus ; To this end, build strong image, restructure the course content, get certification from a global major or a recognized Indian university, reduce the fee so that the course has a wider reach.

Recruiters focus: Identify the potential recruiting firms, design courses to match their demand patterns, involve them in course design and implementation.

Quality focus: The delivery system should be effective. Content is of no use unless the instruction is good. There is no point stressing on numbers. The focus must be on building strong centers in good locations near recognized centers of learning and recruiting firms.

Industry Attractiveness: Industry attractiveness is dependent on the following factors:

1) Profits potential
2) Growth prospects
3) Future trends in the industry
4) Forces impacting competition within the industry
5) Barriers in the industry

Industry performance: This requires an examination a date relating to:

1) Production
2) Sales
3) Profitability
4) Technological advancement etc

Excerpts from Strategic Managemeent