In the recent quarters, NIIT Technologies has been steadily gaining market share to become one of the leading mid-tier IT players today. Arvind Thakur, CEO, tells Beryl Menezes about the company’s success mantra. Excerpts from the interview:
Experts are split on whether 2008 or 2011 was a worst year for Indian IT firms. What’s your take?
2008 was a very bad year as the recession was quite sudden and unexpected. As a result, client spending stopped completely, except for run-the-business and there was no spending on transformational projects or discretionary spends. However, in 2011, we were better prepared and could plan ahead – so while companies stopped discretionary spends they continued with transformational projects and run-the-business.
But this year Nasscom is confident that the worst is over...
In recent times, there has been a fundamental shift in customer experience. So today, there is a value proposition attached to cost arbitrage, which means the prime driver today is business value, rather than just lower prices. This has led to a stable pricing environment, even with cautious spending outlook by companies.
What changes has NIIT made, keeping in mind the increased client emphasis on value-add?
In the case of NIIT, while earlier we would wait for customers to tell us exactly what they wanted, today we advise customers on what they can do to enhance their business value. An example of this would be the recent cargo ground handling solution that we developed for Changi airport in Singapore, and based on the success of this project we are in the process of implementing this solution in Bangalore airport, Hong Kong airport and Beijing airport. Basically, we have shifted from a commoditised model to a value-driven model, which means even changes in pricing by other players, doesn’t impact our business.
What are some of NIIT’s other technological investments, especially towards social networking, mobility, analytics and cloud (SMAC)?
We have also implemented new service lines and platforms and improved our IP-driven assets portfolio to enhance business value, in the last couple of years. About 22% of our total revenues now come from these new service lines. We also introduced a new cloud GIS platform. The cost to the company for introducing these new solutions is expensive, but most of it is absorbed by the client, as it becomes part of the total project cost.
Which verticals do you see growing, going forward?
We are focused on verticals like insurance and travel and specifically in Asia, we are focused on government projects, which contribute 6-7% to our revenues. Government projects always have good traction, even in a poor economic environment, and most of them are long-term, large projects.
Are you confident of meeting Nasscom’s growth forecast of 12-14% for the next fiscal?
We are expecting to grow above industry average on the back of good deal momentum, strong order book, the new value-added business model and good traction in segments like travel (42% of our revenues), BFSI (33%).
What are your views on increase in discretionary spends?
Discretionary spending is up due to commercialisation of IT, in terms of integration of devices and social media. This integration has led to companies loosening control over budgets, as they have no choice but to implement these new solutions to be competitive in the market.
Some analysts say near-shoring is higher due to more localised demand...
We opened a near-shore centre in US recently, seeing an opportunity to service customers better. Localised centres help especially in terms of time zones, which allow for faster completion of infrastructure projects, unique skill-sets as per local regulations and helps avert the language barrier. For example, 100% of our staff in our centre in Spain are Spanish, while in the US and UK about 45% of staff are locals. This also helps in being a net jobs market creator, and thus local hiring will continue to grow, going forward.