NIIT’s strategy in past years has been to increase marketshare through initiatives like technology enhancement, new product introduction and brand-building. But behind all this, the company has also been buying into domain expertise—inorganic growth walking along the acquisition or partnership roads. Here, the maxim of math, physics and chemistry has been put to work—the numbers have to work (math), the two gears have to mesh together and work smoothly (physics), and the people’s aspirations and hopes have to be lived up to (chemistry). But these parameters were hard to come by in any one given company.

So the company took another route—the EDGE program. Here, it would take a minority stake in a company developing a unique product or service, around which there are services required. The larger picture here—the stake gives NIIT a stronger partnership, and the target company gains a strong implementing, integration and alliance partner. NIIT gains access to technology that’s exclusive, and gets to participate in the development of the technology. And here’s the added benefit—part of that development can be done offshore, and there’s clear revenue streams for both NIIT and the partner (or acquired company). NIIT has so far made six such acquisitions or partnerships.

Plus, happy tidings from the slowdown—in prior acquisition deals where the math was not right but the other two factors were meshing, low valuations saw the math becoming very attractive post the IT meltdown. Here, NIIT has made three acquisitions:

Click2Learn: A Paul Allen product company that also did services. When Click2Learn decided to do only products (the services business was losing money), NIIT bought the services business. "They got some money for a loss-making business and we got instant access to 200 customers, and their order books," explains chief executive officer Vijay Thadani. "We got their losses too, but since we brought everything offshore, the business turned profitable, instantly. So everyone was happy, and continues to be." NIIT acquired the custom development business of Click2learn and now uses Click2learn’s well-known Aspen enterprise learning technology platform to offer knowledge solutions. The acquisition gives NIIT’s knowledge solutions business access to a large market requiring custom learning solutions.

Click2learn is expected to bring in revenues of $15 million over the next two years.

Osprey: An SAP implementation company and NIIT’s self-professed "proud catch". "That’s because 10,000 miles way, in the wilderness of America, sit 60 people who are now born NIIT-ians. The street itself is called Osprey Drive. NIIT began talks with Osprey in 1999 itself, but the price was high… till the slowdown hit. And when the VCs asked the management to go and look for a suitor, they contacted NIIT. The acquisition fits in with NIIT’s enterprise integration offerings. The Nasscom-McKinsey study shows that packaged solutions implementation and support will be one of the largest exports area for the Indian IT industry. Osprey is an end-to-end solutions provider in SAP. NIIT Technologies’ enterprise application integration focuses on packaged solutions and the acquisition gives NIIT Technologies the range of capabilities in SAP that it can take to customers globally as a key offering. Osprey’s capabilities, combined with NIIT’s reach, make this acquisition an important step forward.

Osprey is expected to bring in revenues of $35 million over three years.

DEI: The acquisition was targeted at gaining domain expertise in the insurance space, and has worked well. Today, more than anyone else, we have experience in the insurance business. DEI is a group of consultants with expertise and understanding of the insurance space in the US, and the buyout is expected to give a boost to NIIT’s FIB practice.

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