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Training & education: An army of one million

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CIOL Bureau
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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.

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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.

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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.

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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.

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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.

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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.

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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.

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IT Training Market Trends



1998-99 (Rs lakh) 1997-98 (Rs lakh) Growth

%
Corporate Training 9805 8980 9.2
Individual Training 109550 76628 43.0
Total 119355 85608 39.4

IT Training Market Snapshot 1998-99



* Number of enrollments in

1998-99
953000
* Number of vendor certifications 121000
* Number of training centers

across the country (estimated)
  Above 3500
* Number of training centers in

major cities and towns
1195
* Number of training centers in

other cities, towns, districts
1634
* City with the largest number of

training centers
Chennai
* Number of available training

courses (estimated)
550
* Average enrollments per vendor 40,387
* Average training centers per

vendor
125
* Average revenue per student Rs 12524
* Average revenue per course Rs 236 lakh
* Average revenue per training

center
Rs 35-40 lakh
Includes only private educational

organizations

Top 20 Training Vendors



Rank Vendor Total (Rs lakh) Share%
1,2 Aptech, NIIT 61738 51.7
3 SSI Ltd 7372 6.2
4 LCC Infotech 6400 5.4
5 Tata Infotech 4259 3.6
6 Indian Institute of Hardware

Technology
2100 1.8
7 Software Technology Group 2000 1.7
8 Bureau of Information Technology

Services
1800 1.5

9

First Computers 1750 1.5
10 Pentafour Communications 1633 1.4
11 Jetking School of Electronic

Technology
1603 1.3
12 IIS Infotech 1415 1.2
13 BDPS Software Ltd 1110 0.9
14 Boston Education and Software

Technologies
1071 0.9
15 SQL Star 1051 0.9
16 CMC Ltd 1049 0.9
17 IBM Learning Services 1008 0.8
18 Edutech Informatics 875 0.7
19 CADD Center 769 0.6
20 MicroUniv 700 0.6
Others 19652 16.5
Total training revenue 119355 100%
Average revenue per vendor 3424

Vendor Rank by Students Enrolled



Rank Vendor Total

enrollments
Share

%
1,2 NIIT, Aptech 466000 48.9
3 LCC Infotech 160000 16.8
4 Tata Infotech* 80000 8.4
5 SSI Ltd 54106 5.7
6 Software Technology Group 42000 4.4
7 First Computers 19700 2.1
Others 131194 13.8
Total 95300 100.0
Avg enrollments per vendor 40387

* DQ Estimate

Vendor Rank by Revenue per Student



Rank Vendor Revenue per student (Rs)
1 Globsyn Technologies 102041
2 Datacraft RPG 37143
3 Indian Institute of HW Technology

Ltd
25532
4 Pentafour Communications 24483
5 SQL Star 17533
6 Zap Digital Design Academy 17000
7 NIIT Ltd 15322
8 SSI Ltd 14196
9 Jetking School of Electronic

Technology
13046
10 Boston Education & SW

Technologies
11880
Average revenue per student 12524

Vendor Rank by Number of Centers



Rank Vendor Number

of training centers
Share

%
1,2 NIIT, Aptech 1880 62.6
3 Tata Infotech 174 5.8
4 First Computers 156 5.2
5 Software Solutions Integrated 100 3.3
6 Edutech Informatics 94 3.1
7 Software Technology Group 91 3.0
8 BDPS 76 2.5
9 IBM Learning Services 56 1.9
10 CMS Computer Institute 55 1.8
11 Indian Institute of HW Technology 42 1.4
Others 280 9.3
Total no of centers 3004 100.0
Avg no of centers per vendor 125

Vendor Rank by Revenue per Center



Rank Vendor Revenue

Per Center (lakh)
1 Globsyn Technologies 500
2 SQL Star 175
3 Datacraft RPG 130
4 Pentafour communications 96
5 SSI Ltd 72
7 Kaashyap Radiant 45
8 Jetking School of Electronic

Technology
41
9 NIIT Ltd 40
10 World Wide Web 36
Average revenue per center 40





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