Analysis of Software Education and Training Industry

The following chart presents a useful framework for industry analysis:

Industry analysis: A Frame work

1) Basic features of the industry
2) Industry environment
3) Structural features of the industry
4) Industry attractiveness
5) Industry performance
6) Industry practices
7) Future scenario

Basic features of the industry: This step provides a brief overview of the current status of the industry. In this a category factors such as current size of the industry, product offerings- their relative volumes, the performance of the industry in recent times etc. are included. In this background let’s examine fortunes of IT education and training industry closely.

The IT training industry is characterized by intense competition between the Big boys and the small, regional players. The slowdown in the United States has affected the fortunes of the industry in recent years. Once branded as a sun rise industry with steady returns, it has witnessed de-growth in 2001-2002 . Many franchisees have drawn their shutters down; rates for software courses have come down drastically and capacity utilization in many cases, is pathetic.

Current status of IT Training Industry:

NIIT – Consumer corporate and specialized training.

No. of centers – 2445

Aptech – same as NIIT with additional emphasis on multimedia training

No. of centers – 2449

SSI – Short term high end courses.

No. of centers – 759

LCC – Plain vanila, all purposes trainer with strong presence in the East.

No of centers – Over 350

Tata Infotech – Consumer and corporate training (more of the later now).

No. of centers – 309

STG – emphasis on short term courses as well as soft skills.

No. of centers – 300

Edutech Informatics – Focuses on the university market and on bioinformatics

No. of centers – 250

ET&T – Another all purposes training school

No of centers – 150

The industry has lost a major chunk of its business during 2001 and 2002. Due to recession in IT placements globally students sentiment toward IT education centers has turned negative.

Industry Environment: The second step in industry analysis highlights the industry environment in which the firm in question operates. According to Michael Porter, industries may be classified into five categories based on their environment: fragmented industries (where companies face many opportunities for differentiation but each opportunity is small, a restaurant for example), emerging industries (those in the introductory and growth phases of their life cycle television software industry software industry for example). Mature industries (such as pharmaceuticals, chemicals, telecommunications electronics where technology plays a major role), declining industries (where the transition from maturity to decline is happening as result of technological substitution as the case of typewriters, railroads or changes in consumer preferences as in the case of jewellery watches, designer suits, or demographic shifts) and global industries (with manufacturing bass and marketing operations in several nations). As regards Indian IT training industry as things stand now it is a declining industry. The industry is seriously impacted by its own tunnel vision. For a painfully long time most players (NIIT, Aptech, SSI, CME, STG, LCC Infotech) have focused their efforts in franchisees and students ignoring their real customers – recruiters. Indian software companies such as Infosys, Satyam Computer, Wipro, TCS and others wish to enter the business transformation domain and compete with global consulting firms. They are no longer content to provide low end IT services. They want to look at the product space too. Under the circumstances the students trained by the training divisions of NIIT, Aptech etc do not find rewarding jobs in the market place. Result: Yesterday’s flourishing business of IT education would soon be dead.

Industry Structure: Industry structure deals with several structural features such as total market size, number of players, relative shares of the players, nature of competition, barriers to the industry cost structure, strategies pursued by each player, entry barriers (product differentiation technology cost advantage global reach) etc.

Source: Strategic Management