What happens when dot-coms riding high on an Internet freak wave go bust and a couple of major IT training institutes that have been painting the country red with aggressive marketing campaigns suddenly vanish into thin air? If that weren’t enough, what happens when the US—the only major importer of IT manpower from India—is hit by its first-ever tech-led slowdown and starts benching bloated workforces? Panic is the word that springs to the mind, when one remembers what the Indian IT training sector underwent in FY 2000-01. But before we paint this gory picture of all-pervading gloom, there was the upside too, as the bigger players kicked off the process of consolidation. Training companies posted an overall growth rate of 48%, much in consonance with the growth of the IT industry itself.

The IT training industry has been growing at over 35% during the last five years (only 1999-2000 was the exception, where growth was 31% and revenues were Rs 1,753 crore). The overall segment has posted a CAGR of 41% between 1995-96 and 2000-01, while the domestic market grew by 49%, showing revenues of Rs 2,326 crore, compared to Rs 1,561 crore—a growth of 30.73% in 1999-00. However, the IT training sector maintained its export growth at 38%, clocking revenues of Rs 265 crore, compared to Rs 192 crore in the previous fiscal. Also, as much as 90% of revenues came from the domestic market, with exports accounting for the remaining part. In 2000-01, the share of the export market fell to 10% of the total revenues with Rs 265 crore, compared to Rs 192 crore (11%) last fiscal.

The dot-com fiasco

During Q1 and Q2 of FY 2001-01, the realization of the importance of India’s intellectual capital and its possible shortage was the key factor driving growth of the domestic IT training market. With more than 19 states pursuing bullish IT policies, the demand for software professionals within the country was immense. Outside, the US had increased the number of H1B visas, while countries like Germany, France and Japan also offered incentives to woo Indian IT professionals. The world, particularly US enterprises, realized the importance—in terms of cost savings and value—of moving work offshore to India.

The underlying note of urgency, led by the booming dot-coms, was because of a demand for e-commerce, Internet and Java professionals. This resulted in a flurry of e-commerce courses being offered by all institutes. By the second half of the year, dot-coms had become the buzzword, leading to an unprecedented mushrooming of institutes hawking Web-related courses. It wasn’t that certification courses were taking a beating, it was just that the best paymasters were not looking anymore for just a Microsoft certification. Sure, technology skills as evidenced by a certification were also in vogue, but an understanding of solutions and systems skills—all these around the Web and commerce—was burning hottest.