High degrees in the desert
New Delhi: The hundred acres of land, on the road from Delhi to Jaipur, were marked in government records as banjar (barren) and beehad (inhospitable). Yet, the uneven patch has been fenced and parts of it landscaped in the last two years. Dams have been built on the adjoining hills to keep flash floods, which happen during the monsoon rains, from entering the campus. An old jaal pilu tree, devastated for fodder and firewood by villagers and nomads, has been resurrected; a road meant to run over the old tree now gently curves around it. Some buildings have been constructed, and work is going on at a few others. The temperature can touch 49 degrees in the summer. This is where Rajendra Pawar, the chairman of NIIT, wants to give shape to his dream project, the NIIT University.
There are 122 students studying engineering and business administration at the university. The students say that what drew them to the new university was the NIIT brand; it also doesn't seem to be their first choice. Pawar knows that building the brand equity of an educational institution takes time -- a problem that also crops up when he goes out to recruit faculty. But he has a 10-year construction plan for the University, at the end of which, he hopes, there will be 5,000 students on campus. Midway, he hopes the university will have proven that it can sustain itself financially through fees, grants, incubators and sale of intellectual property.
Meanwhile, Pawar is going all out to make NIIT University a green campus. A 1.6-km tunnel transports wind 12 feet below the earth's surface, where the temperature at all times is 24 degrees, across humidifiers and water curtains into all classrooms, offices and hostels. Another duct, fitted near the ceiling, sucks out all hot air in the room. Ninety-seven per cent of the water (struck at a depth of 300 ft) is recycled. The architecture is conventional Rajasthani, with courtyards and buildings close to each other in order to make the best use of shadows in the blistering heat. A nursery has been set up for local trees, some of which, like the jaal pilu, face extinction. Pawar has sought the state's permission to green the neighbouring Aravalli hills.
Pawar, along with Vijay Thadani and Parappil Rajendran, had started NIIT for IT education in 1981. It set up centres across the country and offered consultancy to companies. Out of consultancy was born the software division of NIIT, Pawar's recent success. In the 1990s, the software division stayed away from the high-volume and low-margin sectors like body-shopping and Y2K. That's why it never had the scale of companies like TCS, Wipro and Infosys. After the dotcom bust of 2001, Pawar took some strategic decisions: One, software was spun off into a separate company, NIIT Technologies; and two, instead of horizontals, he chose to focus on verticals. Almost 55 per cent of the business came from three verticals -- travel & transport, BFSI and a mix of manufacturing and supply chain. These became the three chosen verticals. The contribution of the other verticals has come down from 45 per cent to 12-15 per cent now. "The strategic choice had an element that was shrinking -- that was a drag. Not any longer," says Pawar. "Our (profit) margins are Tier 1 margins."
In fact, the operating profit margins of NIT Technologies at 20-23 per cent are better than IT education under NIIT (10-13 per cent). Also, NIIT Technologies is growing at a faster clip, and the two companies are running neck and neck. While NIIT reported consolidated income of Rs 1,248 crore (and operating profit of Rs 67.20 crore) in 2010-11, NIIT Technologies closed the year with Rs 1,232 crore (operating profit of Rs 240 crore).
The reason, says Pawar, is that IT education still has a large contribution from emerging markets, though he has tried to move it up the value chain with acquisitions in the US.
In IT education, Pawar has also had to battle quality perceptions. "Defects happen in any service sector," says Pawar. "On customer satisfaction, placement and student performance, our matrix has remained very good. It's not an easy business because everyone has a personal experience. There are few institutions in the world that deal with both scale and quality." Hasn't NIIT lost mindshare in the education space to newcomers like Educomp and Career Launcher? "There have been at least four waves of training in the IT industry since 1981. Companies came and went; the only brand that stays rock steady is us," Pawar replies.