NelsonHall recently attended NIIT Technologies European Analyst & Advisor Forum in London. For those readers not familiar with the company, NIIT Technologies is a mid-sized Indian-headquartered services provider, generating annual revenues of ~$410m, of which around 48% from the U.S. and a third from EMEA. EMEA has dominated recent wins (50% of the order intake in the last quarter), and the company is also seeing growth in some top EMEA accounts.

NIIT Technologies has a clear focus on a few target industries, with Travel & Transportation accounting for nearly a third of its global revenues, Insurance nearly 25% and Banking & Financial Services another 20%.  From a service line perspective, ADM represents the bulk of activity (around two thirds of global revenues) and infrastructure management services another 17%.

An emphasis of the half-day event was how NIIT Technologies is moving away from its traditional model, one that was essentially ‘lift and shift’ with expertise and software IP in a few select sectors, to be one that is more clearly focused on customer satisfaction and digital outcomes

CEO Arvind Thakur outlined three strategic priorities for the company:

• 'Smart IT’ (automation/AI)
• Superior Experience
• Scale Digital

Smart IT: Enter TRON

Not the 1982 original, nor the 2010 sequel (both starring Jeff Bridges) TRON is the moniker that NIIT Technologies has recently given to its growing portfolio of smart automation tools for use across infrastructure, applications and business process services. It has partnerships with the likes of UiPath for BPO and with Nanoheal for its IT helpdesk operations. Expect to hear more partnership announcements and additions to TRON.

Superior Experience: Hi 5 for a millennial workforce

Thakur reminded us how NIIT Technologies has sought for some time to engender an organizational culture of “Up Your Service”, with its ‘Hi 5’ approach.

Hi-5

Geared toward a younger workforce, and explicitly encouraging employees to be customer-centric, to question everything and have the confidence to unleash new ideas, we imagine Thakur’s personal pleasure whenever a young employee approaches him with a high five.

Current initiatives include widespread training on design thinking and building design studios. Again, expect to hear more about the latter.

Scale Digital

NIIT Technologies has joined the rank of service providers who are revealing what proportion of their revenues come from “digital services” (though none specify what these cover). In its most recent (Oct-Dec 2016) quarter, management claims that digital services accounted for 19% of its total revenue, up from 15% in the prior year quarter. More important than the percentage itself is the level of topline growth this indicates: by our estimates, this represents a y/y growth of nearly 30% from “digital services”. For a company whose overall topline grew by just 2% last quarter, ‘Scale Digital” is clearly a priority.  

New Global Head of Digital Services

The importance of the Scale Digital strategic pillar is reflected in the decision, rather than to replace the COO position, to instead to create a new EVP role of Head of Digital Services, and appointed in January Joel Lindsey (ex. HPE digital transformation program lead). It is still early days; we will be looking with interest to see where and how he chooses to focus.

Digital Experience

NIIT Technologies’ clients are primarily in B2C sectors (T&T, BFSI, media), where digital transformation strategies have centered around the customer experience. Accordingly, NIIT Technologies articulates its approach with digital uses a deep understanding of customers’ pain points and moments of truth to help clients develop sector-specific ‘Digital E3’ (Emotionally Empathetic Experiences):

• Travel and transport, being made to "feel special"
• Investment banking, "feeling secure"
• Insurance, "feeling cared for".

Digital Analytics

We also heard briefly about ‘Digital Foresight’, a proprietary framework and platform which integrates internal company data, external public data (from commercial sources and from social media), and applies predictive analytics. The focus is on BFS and transportation sectors, and organizations handling large volumes of transactions. See an earlier blog about Digital Foresight here. Again, we expect to hear more about ‘Digital Foresight’ and its application in other sectors.

Platforms: new head of NITL

Another element of NIIT Technologies’ positioning on its abilities to support clients on their digital transformation journeys is its platforms business, in particular, its London market software arm NIIT Insurance Technologies Ltd (NITL).  Examples of investments in recent years include the Navigator, Acumen and Exact components for multi-market analytics and risk aggregation, and the Advantage multi-market microservices platform, which also supports technologies such as IoT.

The NITL business is not a major revenue generator in itself and growth is currently flat (a consequence of Brexit), but it is a high margin (~20%) business that provides NIIT Technologies with a clear presence in the London Market.

And, again, there is a recent EVP-level hire to head NITL: Adrian Morgan (formerly at London Market competitor Xchanging where he established Xuber, then at CSC where he was also UK Head of Digital for Insurance). His appointment indicates the importance being attached to growing NITL (which has had around $25m investment in platform development in recent years) – perhaps Morgan will try to take Advantage into other regions such as Singapore? Certainly, we should expect to hear more about NIIT Technologies platforms business.

NIIT Technologies has had several quarters of low single-digit growth, impacted most recently by short-term headwinds such as a client-specific weakness in the U.S. travel sector and by an Indian government sector contract, also by current uncertainties in the London market due to Brexit. A return to double digit growth is not likely on the next couple of quarters.

However, there is a very evident emphasis from the top on driving automation and on shifting its business to digital services and to growing the platforms business. In these regards, NIIT Technologies is holding its own with much larger IT services players. The company also benefits from its strong focus on a few target sectors, in several of which it has a significant presence.

The EVP-level appointments of Joel Lindsay and Adrian Morgan (and the naming of TRON!) are clear indicators of investment priorities. We expect to see some interesting announcements coming out of NIIT Technologies in the next few years.

Mike Smart and Rachael Stormonth