NIIT sees year-end turnaround

Wong Choon Mei

KUALA LUMPUR: India's largest computer education and software services firm

NIIT Ltd., said on Monday that it expected demand for software to pick up at the

end of the year and was preparing for it.

"There is high tide, and there is low tide. The slowdown is temporary,

and when the revival comes, it is going to be even stronger than the current

fall," said Rajendra Pawar, chairman of the company, at a news conference

after the opening of NIIT's regional multimedia development center in Malaysia's

capital.

Indian software firms dominate the technology sector of the country's stock

exchange, with annual revenue growing at rates of more than 50 per cent before

this year. But the sector has been hit by a downturn in the US economy, its main

market that accounts for more than half of total sales.

"When the revival comes, we see a very good demand for Indian software

companies, as they have proven they can do better than any other software firms

in the world," Pawar said. New Delhi-based NIIT, with 2,228 software

education centres in India and abroad, last month reported a 31.43 per cent jump

in second-quarter net profit to $10.32 million, but warned performance going

forward may not be as good.

It blamed slowing global economic growth and a general downturn in sentiment,

saying operating profit could fall by 30 to 40 percent this year. It had posted

a net profit of 2.94 billion Indian Rupees ($62.7 million) in the year to

September 2000. "We are sticking to our forecasts," Pawar said.

Four quarters

Last week, Indian technology firms told the government, that the slowdown

affecting the industry would not last more than three or four quarters. Pawar

said NIIT intends to reduce high-revenue, low-margin systems integration and

software product distribution as a share of its overall business.

"We are restructuring our portfolio of businesses and shifting from

areas where we glue together other people's solutions, which are less

value-added," he said. NIIT hopes to take advantage of Malaysia's

infrastructure facilities in its high-tech Multimedia Super Corridor, one of the

most ambitious projects launched by Malaysian premier Mahathir Mohamad to help

the country achieve developed nation status by 2020.

It is a 15-by-50 km (9-by-31 mile) zone stretching southwards from Kuala

Lumpur's Twin Towers to the city's shiny but under-used international airport.

"We like Malaysia's mindset and focus on multimedia, which we see as the

future of the industry," Pawar said.

(C) Reuters Limited 2001.