Training & education: An army of one million

The IT training market in 1998-99 grew in value by a
respectable 39% over the previous year-but even that healthy percentage does not
completely describe the levels of achievement and transformation in this industry segment.
Consider this: the total number of enrollments exceeded 950,000 in 1998-99, a huge number
by any standards. Looking at undisclosed statistics from a additional vendors, we believe
that the training industry exceeded a million enrollments and the Rs 1,000-crore mark in
revenue.

Overview

Looking at 1998-99, if one were to list the most distinguishing trends it would
be the transformation brought into the industry by the strategic onslaught of vendor
certifications. Certifications from Microsoft, Oracle, Lotus, Cisco, Novell,
Baan, Autodesk, IBM dominated the course offerings from close to 50 vendors who compete in the
domestic learning-scape with their 500-plus courses. Course structures, which used to be
researched with industry patrons and were catering to their immediate recruitment and
future needs, have been transformed to include the syllabi of these vendors. Many of the
training vendors compete on the multiplicity of certification preparations included in
their course structures. And the student onslaught has not been far behind.

With end user organizations and the IT industry battling
vastly disparate standards of IT education and learning across the multitude of
candidates, vendor certifications now appear to be a safe bet for expecting a uniform and
acceptable standard of competency. While the link between obtaining a vendor certification
and competency in the job is probably not direct, for would-be employers vendor
certifications have now become the minimum qualification standards. And the spin-offs are
there for everybody to see. Today, students need to worry less about the institute
offering the certification, since the vendor or their representatives have already done
that for them and the industry. And they can concentrate more on the type of certification
to settle for, influenced by their qualifications, previous experiences, employment
opportunities, aspirations and employer support. In return, employer organizations
globally have absorbed certified professionals with starting salaries ranging from $60,000
for a Lotus professional to $100,000 and above for a Microsoft or Cisco professional.

Opportunities beckon

In 1998-99, vendor certifications accounted for 12% of total enrollments. In
1999-00, we expect this percentage to be as high as 20% of enrollments. With Microsoft
applications dominating the small and medium enterprises and the desktop, the highest
demand in sheer numbers, and therefore the salary benefits, is for Microsoft Certified
Professionals. And with course fees at Rs 25,000, Microsoft certifications have become a
numbers game.

There is a close parallel between Microsoft's product and
education strategy. Microsoft products are shipping at a speedy clip of more than 50% in
units, buoyed by the huge three-tier distribution channel of 2,000 partners and the
special India pricing. The education strategy has also similarly been constructed around
two alliances with NIIT and Aptech—the two accounting for more than 50% of the total
training centers in the country, ensuring the sheer availability of centers for the end
user. And similar to its special India pricing for products, Microsoft charges $25 for its
certification tests versus $100 in the US.

While home-grown and global ERP shipments continue at a
strong pace in the domestic market, maybe a trifle slower than in the previous year, the
demand for ERP-certified professional, is driven entirely by lucrative employment
opportunities outside the country. And training vendors have capitalized on this
market-demand equation. Today Oracle, Baan and SAP certification courses are probably the
most expensive in town, with offerings from SQL Star, Nicco Infotech, Baan Institute and
SAPient College approaching and exceeding the Rs 100,000 figure. This is not the numbers
game, these courses are not for everybody.

In contrast Lotus, Novell, Autodesk and Cisco are only
beginning to ride the wave. With 1998-99 giving most networking vendors more than 50%
growth in value, driven by corporate and industry spending after the New Telecom Policy,
Cisco and Novell are going to see high demand levels for networking, internet and WAN
professionals. Also, with recent shipments of large corporate and government orders for
Lotus messaging, collaboration and groupware solutions, Lotus is likely to experience
increasing demands for professionals in these areas. Similarly, the increasing domestic
competitiveness and usage of IT, and the upturn of corporate spending in 1999-00, are also
likely to increase the demand for Autodesk professionals in the CAD/CAM application areas.

And yet to get unleashed are vendor certification courses
from Intel, IBM, Sun, SAS Institute and Informix, involving Java, internet programming,
ecommerce, data warehousing and S/390 and AS/400 application areas. Some of the hottest
courses in town are currently in data warehousing, ecommerce, internet programming and
Java offered by Pentafour Communications, Kaashyap Radiant, Bitech,
TransEd, IBM Ace,
Globsyn Technologies and Asset International, amongst others.

Vendor differentiation

Competition in the Rs1,000-crore domestic training market between the 50-odd
vendors has led to strong differentiation across a number of different strategic
parameters. We take a look at some of the major competitive differentiators.

Revenue: Two heavyweights, NIIT and Aptech, dominate the domestic industry with a combined revenue share of 52%. The next
ranks are witnessing close jostling between LCC Infotech, SSI and Tata
Infotech. And the
next group is dominated by IIHT, STG, First Computers and BITS.

Training Centers A strategic decision by
any training vendor is whether to play the volume or the value game. The volume players
are characterized by their never-ending drive to keep adding on training centers. This
almost mindless obsession can be seen between NIIT and Aptech. For every training center
of one, you will find the other-in India or abroad. NIIT and Aptech account for 63% of the
training centers across the country, with a higher dominance in the semi-urban areas. In
the last one or two years, SSI and First Computers have also increased the number of their
training centers quite substantially. The value game on the other hand involves vendors
like Globsyn Technologies, Pentafour Communications, Oracle Education, SQL Star, Nicco
Infotech, Kaashyap Radiant, TransEd, Baan Institute and SRM Systems and Software.

Enrollments: This parameter is a direct
consequence of the above strategy-the volume or the value. Vendors topping the list of
training centers will also top the list of enrollments. The Aptech-NIIT combine accounts
for 49% of the breathtaking 950,000 enrollments in 1998-99. They are followed by LCC
Infotech, Tata Infotech, SSI and STG.

Courses: Most courses can be divided into
three categories: short, medium and long term. The short-term courses are probably the
more lucrative, with high dividends in a period of 15 days. The medium term involves
courses between 15 days and six months and the long term, over six months. Most vendors
adopt strategies of either selecting one area or a mix of areas. For example, out of 110
courses offered by NIIT, 103 are short term. And the 45 courses offered by Aptech are
roughly divided across the three areas.

On a relative scale, the above four parameters are more
descriptive than differentiating. However, the following parameters almost sum up the
gamut of strategic competitiveness for training vendors.

Revenue per enrollment: Vendors operating
short-term courses top this list, earning Rs15,000 to Rs30,000 per enrollment. This
includes Globsyn, Datacraft, IIHT, Pentafour, SQL Star and Zap Digital Design. NIIT tops
the list of long-term vendors, followed by SSI and Aptech. While NIIT averages a revenue
of Rs15,000 per student, competitor LCC Infotech accrues a revenue of only Rs4,000 per
student.

Revenue per center: This is also likely to
favor short-term courses with a higher frequency of courses, resulting in better
realization per center. Vendors with short-term courses, like Globsyn, SQL Star, Datacraft
and Pentafour, realize between Rs100 and Rs200 lakh per center. NIIT, Aptech and Tata
Infotech appear in the middle of this list, realizing Rs25 to Rs40 lakh per center. LCC
Infotech and First Computers appear at the bottom of the list with Rs11 lakh per center.

Individual and corporate traning: A look
at the training industry revenue since 1990 reveals the existence of both corporate and
individual training even ten years ago. In fact, if there is one characteristic which has
been steady in the spanning years, it is the relative contributions of both these
components-93% to 7% in favor of individual training. Apart from Aptech and
NIIT, the
other serious contenders for corporate training are Tata Infotech, SQL Star, IBM, IIHT and
CADD Center.

Looking ahead

The coming months appear to promise many more key developments and increased
competitiveness. Tata Infotech after a span of more than eight months has finally
announced the opening of centers providing CBT-based training-an offshoot of its alliance
with CBT Systems. This is likely to change the equations of revenue per student and
revenue per center and open up the corporate education market. NIIT has recently revamped
its entire course structure making it web centric. Called Platypus, the new courses are
aimed at making their graduates internet-ready for any organization and market segment. In
the coming months, NetVarsity and eNIIT are likely to be the company's strategic trumps,
yielding yet speculative advantages. In the mass market, Singapore-based Edutech
Informatics is very serious about repeating its success in the Asia-Pacific region in the
country, with STG, SSI and First Computers likely to give it hot competition.

A worrying last word. The industry has spewed out, at least
on paper, 950,000 enrollments-and maybe only 850,000 students. Perhaps only 400,000 are
being absorbed in the Indian IT industry. Where are the others headed? Just like the
elusive Indian middle-class market, when the bottom fell out of the barrel, leaving
suppliers with their dozens, are we likely to see the water spilling out? Is the training
industry now headed for an over-capacity situation, creating a never-expected glut in IT
human resources? The arrival of the next decade may probably give the answers.

IT Training Market Trends

IT Training Market Snapshot 1998-99

Top 20 Training Vendors

Vendor Rank by Students Enrolled

* DQ Estimate

Vendor Rank by Revenue per Student

Vendor Rank by Number of Centers

Vendor Rank by Revenue per Center

DATAQUEST