Monday, July 16, 2001		Article

RAJENDRA Pawar is used to seeing an opportunity in every problem. Two decades ago, while working for an IT company, he found the lack of computer skills among customers to be the main hitch holding up sales. So he decided to correct the situation by launching NIIT, the first private sector company to provide computer education in India. Today it has become a software and training solutions corporation of global dimensions, which had revenue of Rs 1237 crore last year. Pawar’s biggest challenge as a pioneer in the early years of the NIIT was to overcome scepticism surrounding educational offerings from the private sector. This long-term view distinguished him from fly-by-night operators and made NIIT a household name across the country. Employers have now come to recognise the training provided by reputed private institutions like NIIT. Now again a problem looms on the horizon with a slowdown in the IT industry. But for Pawar, it’s no problem, just an opportunity as the market rids the system of weak and hollow companies. In this interview, Pawar talks about the positive sides to the slowdown, how it will strengthen the IT training industry by separating the wheat from the chaff, how it will bring the better companies to the fore for discerning customers, and how it represents a window of opportunity for people who want to make it the next time the IT industry gets on a roll.

First and foremost, I think this correction is bringing in strong elements of realism. That means customers will be far more demanding and start differentiating between the good and the bad. In that sense, the slowdown would be good for the fundamentally strong companies that are long-term players in the industry. I would not say it is a welcome change, but it has happened, and has a positive consequence. Now with a slowdown you can expect many more companies to be negatively impacted in the next six months.

We are going forward, since I think there is no doubt in anybody’s mind that a revival will happen in due time. In a sense, this is a cleaning up process, out of which will emerge much stronger players, those who have solid business models, those who have strong process capability, and those who have stood with their customers. So, it will be a process that churns up the better players.

It is the same in the software export business. When the going was good, anyone could get in, even body-shoppers. But now I think those without strong business models will have to go. What will emerge is a much stronger industry. So, when you see a revival, there will be fewer companies in the market, but they will be bigger, better and solid companies.

What is particularly important for this six month period is to educate the prospective students that they have to be very selective now to make sure that they invest their time and money in an institution that will at least continue to exist a year down the road.

The NASSCOM-McKinsey report last year had projected the Indian IT industry would be worth $ 140 billion by 2008. Would you revise those estimates now because of the slowdown?

We had projections of 40 to 50 per cent growth on the basis of which we were looking at a certain relative size in the year 2008. My own feeling is that we would not be much lower than these figures, once the revival happens. Because, this time around, I think the Indian software industry will have a bigger market share than in the Y2K time, because its brand equity right now is absolutely A class. Secondly, earlier it was only the USA. Now there is Europe and Japan. A big market is there. It would not surprise me at all, once the revival is in the full swing, if we go back to the days of very high growth.