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New NIIT firm to offer software solutions

New Delhi, Oct. 24: NIIT will spin off its software solutions business as a new company called NIIT Technologies and plans to set up its own university.

The board of NIIT today approved the proposal to spin off its global solutions business into a separate company after appropriate segregation of the knowledge solutions business. The final details about the shareholding of the new entity will be decided within six months.

While the company is keen to have mirror shareholding in the new entity, CEO Vijay K. Thadani said, “ We are open to other arrangements provided that new and existing companies will be able to maintain a sharper focus on their specific business-education and software. This will be a listed company.”

The board also gave a go ahead for formulation of the scheme of arrangement. NIIT chairman Rajendra S. Pawar said, “The purpose of the proposed restructuring is to accelerate growth in the two businesses — education and software.”

The spun-off company will be headed by Arvind Thakur, and will include the presidents of software subsidiaries — NIIT SmartServe and NIIT GIS Limited; the business leaders based in US, Europe, India, Asia Pacific and Japan, including the presidents of the three, recently acquired companies — AD Solutions, Germany, DEI, USA and Osprey Systems, USA.

Over the past year, NIIT’s strategy of pursuing inorganic growth, a strong focus on identified verticals and service practices, and the entry into the BPO space has resulted in a healthy 26 per cent revenue growth matching the software industry growth levels.

As a listed company focussed only on the IT services business, NIIT Technologies will have greater flexibility as well as acquisition currency to create innovative strategic alliances.

“This step will help us realise our aspiration of scaling our business in chosen segments leading to integrated service offerings in IT Services and BPO,” said Arvind Thakur, president of the global solutions business.

In the last two years, NIIT addressed the challenged market situation through its strategy of growing market share through new product launches and aggressive marketing. This led to NIIT ramping up its learning revenues by 7 per cent in the last 12 months in the backdrop of the IT training industry de-growth of 23 per cent last year.

Commenting on the company’s plans to set up a university, Pawar said, “NIIT has stated its strategic intent to attain global leadership in chosen areas of learning. Towards this end, during the past year, the company has identified and developed four growth drivers to realise its ambitious growth plan. Setting up a university is part of that vision and we are in discussions with many state governments. As and when we get the approval we will set it up.”

The results of the strategy, put in place to counter the challenging market situation of the last two years, are visible with both businesses recording revenue growth in line with or exceeding the industry growth rate. In the last 12 months, the IT services part of the global solutions business recorded revenues of Rs 500 crore, a growth of 26 per cent. Learning revenues of Rs 395 crore represent a growth of 7 per cent.

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