The NIIT Story

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Case Details:

Case Code : BSTR033
Case Length : 11 Pages
Period : 1989 - 2002
Organization : NIIT
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : ITES

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"We want to reassure the students that there are enough jobs in the IT market provided they have the right kind of IT education."

- P. Rajendran, Chief Operating Officer, NIIT, in January 2002.

Desperate Measures?

In early 2001, India's leading information technology (IT) education company the National Institute of Information Technology Ltd. (NIIT) launched an aggressive marketing campaign to spread awareness among college students about the necessity of strong IT fundamentals and the need for developing new skills in the IT field. The company also launched a television campaign featuring its brand ambassador Vishwanathan Anand (Anand), world chess champion.

The advertisement highlighted the importance of a 'right' IT training institute and how NIIT met all the required standards. This television campaign was supported by an outdoor campaign as well. In addition, NIIT conducted various workshops to interact with prospective students and their parents. Analysts felt that this was the first time that an IT education player had undertaken such an elaborate, nationwide campaign using divergent communication media. In January 2002, NIIT launched another nationwide campaign for its GNIIT career program. The ad campaign promised students, '100% job assurance or money back.' This was the first time that the company had launched such a campaign to attract students.

Though most of the regional and national IT education players offered job guarantee schemes to attract students, NIIT had till then refrained from making such offers. Industry observers pointed out that the company did not have many options. The slowdown in the IT education business and the low student enrolments had badly affected its financial performance. NIIT's education revenues, as a percentage to its total revenues, had dropped to 20% for 2001 compared to 45% in 2000. Moreover, net profits declined by 57% from Rs 2.24 billion in 2000 to Rs 960 million in 2001 (Refer Table I for NIIT's financial statements). NIIT's market capitalization had also come down to Rs 90 billion in 2002 from Rs 240 billion in 2001.

The company's market share in the IT education business had steadily declined from 70% in 1992 to 41% in 1996 and further down to 36% in 2001. Considering all the above factors, the company was forced to opt for the 'money-back' campaign. However, NIIT denied that the 'money-back' campaign was a desperate attempt to improve profitability by getting more student enrolments. The company claimed that the campaign's objective was to reassure students about the availability of jobs in the IT market and of good placements for students of long-term courses offered by the institute. Analysts, however, remained skeptical about NIIT's claims and were doubtful whether the company would be able to reach its planned target of reaching Rs 100 billion in global revenues by 2005.

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