NIIT’s Neo-Nidus, Niche n Name Date:   Monday , May 02, 2005 NIIT Technologies U.S. headquarters in Atlanta is on a holiday. All the delivery teams, sales troops and marketing folks are jamming in the Stone Mountain Resort to talk business over buffet. Everyone is babbling about implementation—a word synonymous with company’s focus since structuring the new strategy—and telling each other what worked and what didn’t in the last fiscal. Lalit Dhingra, President and man at the helm of NIIT’s U.S. operations is emphasizing the company’s strategy: Information Technology integrated with business process outsourcing services for niche segments under one roof. A roof that initially housed both NIIT Education and NIIT Technology services, and split into two separate entities in 2003. But this split-strategy has struck the chord—not only did it give momentum to NIIT’s do-good Technology business in the U.S, but also gave it a contour. Losing out a big chunk of market on the Y2K application building and immediately toppling with its e-commerce investment during the bubble burst, the company’s technology unit today is one of the best 200 small companies to work with in the world. Vision, as Dhingra says, “led to resurrect.” The company actually built tools and methodologies for some of the service offerings like legacy maintenance and modernization. A methodology tool that takes older applications, creates business rules out of the legacy application and puts them into an enterprise wide Web based portal. “This added 30 percent of productivity gains for our clients and another 30 percent as a value add due to our dual shore mechanism,” says Dhingra. Today this service accounts 50 percent of NIIT’s U.S. revenues from nine of its main customers. Vertical Limit As many of the top IT services firms also compete for mid-sized markets, NIIT is focused on delivering fully-fledged end-to-end solutions in niche verticals. This top level and deep decisional vertical strategy taken at its tougher-times has today transformed NIIT from a geography driven company to vertical driven entity. It is also carving a niche for itself in some of the key verticals like the Banking, Insurance, Transport and Retail. These niche verticals mean high domain expertise, and greater focused deals from vertical customers. What is really interesting in the NIIT story is how the company went about building domain expertise in some of its newfound verticals. For this Dhingra recruited some of the vertical specialists from various industries to steer his team: Amit Khandelwal a former employee of United Airlines for transport, Vijay Ghei of retail giant HLL for its retail, Sunil Warier a banking expert for finance and Gary Wood for Insurance. If building domain knowledge and recruiting vertical heads were some of the initiators, then acquiring specialized companies and employing mid-level vertical focused employees were the most crucial ones for NIIT. So it made two acquisitions: DEI and for its Insurance and Osprey for SAP (for Retail and finance) space. Also NIIT went about employing 50 domain experts across the U.S to enhance expertise. NIIT’s vertical focus helps to build long-term relationship with their customers. “We differentiated ourselves in the marketplace by developing solution frame works in each of our verticals,” says Dhingra. Such frame works not only built marketing capabilities for NIIT but also facilitated in increasing productivity for its customers. Agrees Joan Kuehl, SVP Product and Systems Delivery, Sabre Inc., a travel commerce firm, with whom NIIT today has several critical projects in pricing and ticketing system and e-commerce. “NIIT has a deep expertise in the travel vertical. It has worked with many players in the airline industry and some of our own competitors. So it was obvious for us to work with them.” However, for Kuehl, more importantly, Sabre could pick up the phone and talk to NIIT’s senior management, up to the CEO, and ensure that work is serviced appropriately. Although, acquisition and domain expertise helped NIIT rise against its competitors, it was the cross leveraging of some applications within the four verticals—banking, insurance, airline and retail. This has given the company a new dimension. Some applications developed for NIIT’s airline customers were in turn helping the retail segment and the applications of retail segment can be customized to banking segment or so. Vertical focus has fastened NIIT’s customer relationship and added value to its customers. Dhingra testifies this by claiming that NIIT Technologies hasn’t lost a single customer since last two-years of its operations. Last year the company was ranked by Forrester research firm as the No.3 Indian company for its offerings in the Airline/transport vertical and called it an Airline Specialist. Dhingra is optimistic about their services for airline business to cap the No.1 position. In the financing and retail side the company is growing at 40 percent year-over-year and Dhingra considers this to be great growth engine in comparison to his competitors who are ten percent below. “And that’s way below,” he says. Marriage of IT and BPO With the integrated model of IT and BPO, NIIT hopes to cash in on large contracts within these verticals. This integrated IT-BPO offering will churn out a much higher value proposition, claims the company. But this is relatively a new offer that the company started in 2004 and currently operates a 1000-seat center in Gurgaon, India. By venturing into the BPO space NIIT foresees some of its customers to increase their scope of work and outsource their back end processes. Although BPO unit is still an emerging one with few customers and little remuneration, NIIT expects the significant growth going forward. But Dhingra is not keen on large number of customer acquisitions. “We are happy even with fewer customers. Our focus is not to build larger clientele, but to concentrate on each customer’s business and add value,” he says. Dhingra explains NIIT’s plans for profit making, “If you are outsourcing an application development to India, then there are various other business processes associated within that space which could be the immediate choice to outsource.” This helps the company to improve the BPO part of the business if one also does the IT part of it and vice versa, he explains. Though NIIT is a late entrant in the BPO game, Dhingra thinks that NIIT is in a better position to establish vertical focused BPOs, which is usually a cumbersome process for pre-established BPOs. Road to future Dhingra is executing NIIT’s business for 8-years now and the company has taught him what his business course from Michigan hasn’t. It’s about how to run business, how to keep employees intact at hard times and what a focused company can perform. “We had the most challenging experience of running the company, managing the employees in difficult times. But that’s when we learnt to be more accessible to our employees and customers on a first hand level,” says Dhingra. Dhingra and his team is aware that many of the Indian IT service firms get upwards of 60 percent revenue from the U.S. “That is clearly not the position currently we are in,” he says. The U.S. subsidiary contributes 35 percent of revenue to NIIT’s kitty. And Dhingra hopes to match his competitors’ share from the U.S. market. He has geared up his team to double the company’s revenues. The company’s renewed “focus and differentiate” strategy should help him get there. Dhingra is all set to steer his company sitting in drivers seat—of course, with the seat belt fastened.