NIIT Tech rejigs to sharpen focus
The IT services company has carved out new business verticals and strengthened its leadership team
Mid-tier IT services company NIIT Technologies has rejigged its organisational structure with verticalisation of its service offerings as it prepares for the next phase of growth. The Noida-headquartered company company has also hired senior leaders from top Indian and global technology companies to helm these verticals, and located them at the client geographies for faster response.
“We have completely restructured the organisation and have made it verticalised. Now, each of these verticals will be headed by the vertical leaders with its own profit and loss (P&L) account and delivery capability,” said Arvind Thakur, vice-chairman and managing director of NIIT Technologies, told Business Standard.
Under the new structure, NIIT Technologies has created three major verticals — banking and financial services (BFS), insurance and travel. According to the company, realignment of structure from geography-based units to verticalbased divisions has enabled it to service clients faster and better.
“When you place the leadership team near the customers, responses are swifter. That has got formalised in the restructuring process,” said Thakur.
NIIT Technologies also hired a lot of industry leaders through lateral route to head these verticals and have placed them in client locations. For example, Anurag Chauhan, who is currently heading the insurance vertical at NIIT Tech, joined the company in April this year after a twelve-year stint at global IT services and consulting giant Accenture as a managing director. In his previous role, he was heading the technology consulting and implementation services sales and delivery for global clients of Accenture, located in San Francisco. In his current role, Chauhan is to be located in the US.
Similarly, NIIT Tech’s current BFS head Gautam Samanta is a veteran hand from Infosys and is now in London. At Infosys, Samanta had served as a vice-president and global client partner for financial services apart from managing clients in Europe.
The mid-tier firm has also roped in Madan Mohan, a former Infosys veteran, as an executive vice-president and global head of data and automation segment. Mohan, who is currently based out of New Jersey in the US, spent around 16 years in the country where he was an invitee to the Infosys Global Management Committee apart from heading
the South-East US Geo for the company.
The company has also hired Bhartendra Gupta from Microsoft and Anthony Shepard from IBM to drive its cloud services business as part of the restructuring process.
“Hiring senior leaders and placing them as vertical heads in client locations will hopefully pay off,” said Pareekh Jain, senior vice-president and head of India operations at analyst firm HfS Research.
“The company has strengthened its leadership team with a new CEO along with hiring senior executives from reputable firms to lead the verticals. This brings in a fresh perspective to the organisation as senior executives from large companies know the processes and do have the ability to scale up the business, thus supplementing the next phase of growth,” he added.
Even though the IT services segment in India is witnessing slower growth owing to the change in demand patterns, increasing focus of the clients on the digital segment and geopolitical uncertainties among others, midcap IT segment is showing better than expected growth numbers. Factors like focussed approach on fewer verticals and geographies, higher percentage of revenue from digital business and ability to adapt to the changes are making them competitive in the market place.
NIIT Technologies, which derives almost a quarter of its revenues from the digital space, has been showing steady growth quarter over quarter. In FY18, the company reported a revenue growth of 9.7 per cent at ~29.91 billion while its net profit rose 12 per cent to ~2.80 billion during this period.
BFSI continues to be the largest vertical for the company which accounted for 43 per cent of its overall revenues while travel and transportation segment contributed 27 per cent in FY18.
“NIIT Technologies had grown its revenues by 8 per cent organically during the last fiscal after reporting very tepid growth in FY17. So, in a way, FY18 was a turnaround year for them,” said Madhu Babu, a research analyst with Prabhudas Lilladher. "Now, they have a new CEO. Things are definitely looking good for the company. That's why the stock has been re-rated in the last six months. For next two years, we see a double digit growth of around 12-13 per cent in revenue, which will come from verticals like insurance, travel and transportation and banking segments,” he added.
Going forward, NIIT Technologies is expecting to improve on its operating profit margin by focusing on high value digital and consulting business. In the quarter ended March 31, 2018, the company’s operating margin stood at 18 per cent, an improvement of 85 basis points over the preceding quarter. In FY18, the company saw steady improvement in operating margin which stood at 15.6 per cent in Q1. “We have seen a margin improvement in the last fiscal and we hope this to continue,” said Thakur adding that the investment made by the company in automation, is expected to show benefits in coming quarters.
When you place the leadership team near the customers, responses are swifter. That has got formalised in the restructuring process
ARVIND THAKUR
Vice-chairman and managing director, NIIT Technologies