In an interaction with Anil Mascarenhas and Tejal Shringarpure of IIFL, Rohit Gupta says, “With human resource increasingly gaining significance in the overall development of the country, development of education infrastructure is expected to remain the key focus in the current decade.”
The global education industry is going through a sea change. Give us an overview of the industry from India’s perspective.
India holds an important place in the global education industry. The country has more than 1.4 million schools with over 227 million students enrolled and more than 36,000 higher education institutes. The education sector in India is poised to witness major growth in the years to come as India will have world’s largest tertiary-age population and second largest graduate talent pipeline globally by the end of 2020.
Currently, higher education contributes 59.7 per cent of the education industry, school education 38.1 per cent, pre-school segment 1.6 per cent, and technology and multi-media the remaining 0.6 per cent. Higher education system in India has undergone rapid expansion. India’s higher education system is the largest in the world enrolling over 70 million students while in less than two decades, India has managed to create additional capacity for over 40 million students.
Various government initiatives are being adopted to boost the growth of distance education market, besides focusing on new education techniques, such as E-learning and M-learning.
Education sector has seen a host of reforms and improved financial outlays in recent years that could possibly transform the country into a knowledge haven. With human resource increasingly gaining significance in the overall development of the country, development of education infrastructure is expected to remain the key focus in the current decade.
How has the year 2015 been for the company? What would you watch out for 2016?
The Business Transformation (BT) programme has contributed positively to the second quarter numbers. It enabled NIIT to get back to profitability and growth this year. This was reflected in a turnaround performance of the company in the first quarter of FY16 with net revenue at Rs 233.3 crore. In the second quarter, it posted a net revenue of Rs 272.5 crore.
Manage Training Services, (MTS) which is a part of the Corporate Learning Group (CLG), has grown five-fold over the past four years (from Rs 85 crore in FY11 to Rs 425 crore FY15). Revenue visibility for CLG is $191 million with multi-year, multi-million dollar contracts.
The Skills and Careers (SNC) business is back in the black this year- already profitable and growing in the first half of 2015. Net debt is less than Rs 100 crore (gross debt less cash). The focus is to get back to profitability, and growth. It is well aligned to achieve the end objective of attaining sustainable and scalable growth for the company.
NIIT has reinvented itself as an employer over the years, bringing its HR policies in line with present day expectations. Understanding that it has to appeal to youth, the 34-year-old organization introduced a series of initiatives like cool contests that encourages peer appreciation. NIIT was ranked as the “fourth best company to work for” in India by Great Place to Work Institute 2013-14.
For 2016, the future growth strategy has been initiated by the steps taken to achieve Business Transformation, through the three lines of business at NIIT, which include – Skills & Careers Group (SCG), Corporate Learning Group (CLG) and Schools Learning Group (SLG), with the technology enabled shared services platform forming the core.
The focus at SCG has been getting back to profitability, back to growth. It is well aligned to achieve the end objective of attaining sustainable and scalable growth for the company. NIIT.tv and StackRoute are strong first steps by NIIT for the Renewal phase of the three stage Business transformation exercise for its Skills and Careers Business. This began with the ‘Restructuring phase’ in October 2014, and was quickly followed by the ‘Re-energising phase’ that commenced in April 2015. Keeping up the momentum in parallel, NIIT initiated the ‘Renewal phase’ from July 2015 which will evolve over next 3 years.
What are the deals in pipeline? Are there any acquisitions planned?
The deal pipeline is strong. We are regularly evaluating opportunities for acquisitions to strengthen our business in alignment with our overall strategy.
Tell us about your capex plans? How would they be funded?
Capex is estimated to be at Rs.40-50 cr per year. It is funded through a mix of internal accruals and long term borrowings.
What are the disruptive technologies you are focusing on right now?
NIIT recently launched, NIIT.tv - A disruptive innovation by NIIT aimed at radically changing the skilling landscape. NIIT.tv has a reach in about 132 Countries which includes 1326 Cities and 6 Continents other than Antarctica with a total of 100K registered users and over 227 courses.
What are the innovations and experiments being conducted at your Global Delivery Centre currently?
NIIT is undergoing these innovation under the Delivery centers.
We are creating a new way to deliver video-based training, in which learners are able to stop a video in the middle to intervene.
We are working on a system that will construct a cloud-based, video-based presales presentation that can be customized for different clients.
We are working on several things with respect to games including extending our game interaction editor, creating a generic “office” that can be extended to several clients, and creating a mechanism that will allow switching languages in a game.
Comment on NIIT.tv your digital learning initiative and what is the game plan here.
NIIT.tv is an internet TV portal that can be accessed on a computer, tablet or smartphone anytime, anywhere. NIIT will select from the entire population of courses launched each month at various locations and make a certain subset of courses available on NIIT.tv.
NIIT.tv has a reach in about 132 Countries which includes 1326 Cities and 6 Continents other than Antarctica with a total of 100K registered users and over 227 courses.
NIIT will keep updating the content and launch new courses as per industry requirements. These live courses will be streamed through multiple channels from dedicated state-of-the-art studios across India, effectively offering a program calendar equivalent to a multi-channel TV network. In addition all the courses would also be available on-demand at any time. All courses would be delivered through videos plus additional online services in the form of digital courseware, collaboration, assessment, etc. To begin with courses will be offered in English and Hindi, and progressively in other languages. The Beta version of NIIT.tv was launched inviting suggestions from users, to maximize learning outcomes & impact.
However if a student wants placement services or formal certification of performance they have to come to nearest NIIT testing center.
Which are your key clients in CLG. You added Citi to your list recently?
- Technology and Telecom – Dell, Alcatel Lucent
- Energy – Shell, Statoil, Vestas, GE Oil & Gas
- BFSI – Citi, Bank of America, Metlife
- Healthcare/ Pharma – GSK, Quintiles
- For Citi contract work would begin this quarter and would continue to ramp up next year
NIIT has contributed in IT tremendously and have trained 35 million people in the last 34 years. The industry has now matured to an extent, and compared to the more generic skills required in the past, now there is much more diversified and specialized talent requirement which the company will continue to service. Currently all the NIIT centers is a multiskilling center and offer courses across seven sectors of the economy and we will extend that further. One of the biggest challenges faced by the company is while NIIT has already transformed internally, the external perception of NIIT is still the same that NIIT is equal to IT training, which is not true anymore. The truth is, the largest contributor to NIIT’s revenue (over 53% in Q3 FY16) is corporate business international. Even in India, the training that NIIT does is not just in IT. It is all kinds of other industry sector training. Hence there is a significant brand repositioning so that India at large sees NIIT as something much more than what they knew it was.
Tell us more about your Flagship Training Centers? How many more do you plan?
Today all the NIIT centers are multi-skilling centers and offers range of multiple new-age career programs, aligned to the evolving needs of the knowledge economy. Some of the programs that NIIT offers are Executive Management, Banking and Finance, Digital Marketing and Social Media, Cloud & Mobile Software Engineering, Big Data and Business Analytics, e-Commerce & Business Administration and Cloud Computing & IT Management.
The CP centre is the Flagship Training Centre which is high-tech, digital and completely paperless. Now all the NIIT centres are multi-skilling focused on upskilling. For the first time ever, young professionals and students will have the flexibility to choose options from a range of multiple new-age career programs, aligned to the evolving needs of the knowledge economy.
The programs would be offered on pioneering NIIT Cloud CampusTM empowering student to learn on his own terms, at his own pace, wherever and whenever he wants it. Students enjoy higher mobility as they can easily access educational services using a Netbook or a Mobile device that connects them to NIIT’s Cloud CampusTM network. These services will be managed by NIIT centrally using the power of Cloud Computing.
How is the Cloud CampusTM in China doing?
We have launched this recently and are seeing a great response.
In Gamification, what are your offerings?
NIIT has always been at the forefront of cutting-edge technology and strong pedagogy in learning. NIIT’s approach to gamification incorporates both these components to deliver effective and engaging learning for our learners and ensures that gamification is not only fun, it is designed to deliver results.
The team of gamification experts at our Cognitive Arts Center of Excellence in Evanston, Illinois are pioneering new approaches to gamification that enables to rapidly prototype and develop effective learning solutions. The primary products are serious games and real time 3D simulations. NIIT also design overarching gamification strategies that include high score portals, achievements, and other gaming elements.
NIIT has over 25 years of experience designing games and simulations that deliver maximum business impact. Our proprietary critical mistake analysis methodology allows us to arrive at the right interventions quickly, and our suite of proprietary productivity tools allow us to create real time 3D simulations cost- and time-efficiently.
NIIT’s gamification solutions are primarily custom-built for our customers which include large oil and gas corporations, manufacturing companies, and financial services companies. We incorporate many strategies in our gamification solutions including Badging, Coaches/Avatars.
In-Person Games/Exercises, Leaderboards/Dashboards, Mobile Gaming Apps, Serious Games Social Media Integration, Training Simulations and Virtual Worlds.
NIIT’s solutions have earned us many industry recognitions including a 2015 Brandon Hall Gold award for Custom Content, a Silver award for the Best Use of Games in Learning. The company have also been ranked among the Top 20 Gamification Companies listed by TrainingIndustry.com in 2014 and 2015.
Comment on some of the recent partnerships and how are they performing?
NIIT has recently tied up with MetaScale, for the availability of Hadoop Training course in India. NIIT entered into a strategic partnership with HP to offer Post Graduate Certificate Program in Software Testing. The program will enable learners to apply key testing skills and practices using HP Tools.
What are the opportunities you see for the business?
India being a highly populated country, cultivating an educated workforce offers many social and economic opportunities for the country as a whole. According to several reports, India will have a surplus of 47 million workers by 2020, equal to the world’s shortfall. This young workforce will be a remarkable human capital asset for India provided it is well educated and skilled.
As enrolment rates for higher education in India still lag far behind that in other countries, including China, even though India has the world’s largest number of higher education institutions, with nearly one-third of these institutions being less than ten years old. Despite this, India does not have many world-class universities. The major challenges facing India in the higher education sector are a lack of trained faculty; underfunded research facilities, libraries, and information technology systems; low quality research; and politicization of staffing appointments. In addition, there are widespread regional, rural-urban, and gender disparities in student enrolment.
In the past few years, India has announced several initiatives to address these issues, such as:
- Foreign Collaboration
- Community Colleges
- Public-Private Partnerships
The over-arching issues affecting each strata of education in India are quality and relevance. India faces immense challenges in meeting the demands of a growing and young workforce. Quality teachers, relevant curriculum, financial aid for students, and adequate facilities are some of the needs that India's education sector faces. Additional challenges include the inability to meet the diverse linguistic, cultural, regional and local education needs of such a large country.
However, one cannot deny that apart from these challenges the education space is evolving. Today online learning opportunities and use of digital learning tools can help increase educational productivity by accelerating the rate of learning; reducing costs associated with instructional materials or program delivery; and better utilizing teacher time.
NIIT is a pioneer in the use of technology in education. In India, and other developing markets, technology can be a potent force multiplier that can dramatically increase the impact of other scarce resources such as expert instructors and physical learning infrastructure. NIIT’s cloud campus - breakthrough initiative has helped high quality educational programs reach to the remotest corners of the country, thus addressing the dilemma of scalability and quality in education. NIIT Cloud CampusTM is based on a revolutionary educational paradigm which takes students beyond the traditional classroom teaching.
In India, technology training through e-learning is at a nascent stage. Online education covers a wide spectrum of courses and curriculums from vocational courses, special skills training to degree courses and higher education courses. However, in a country where diplomas and degrees have greater importance than the actual knowledge or skill gained, a lack of accreditation and acceptance of online courses is an issue. But as our markets, people’s mindset also mature with time, I think that a blended learning model is the best model for India.
NIIT is much a blended player. We believe that in the space of professional and career training, blended approach will work. Therefore we believe in a combination of digital platform based services and physical services at physical locations that will serve the need of a large majority of customers who are looking for professional skills.