How Will NIIT Technologies Move from Survive to Thrive?

During its recent Industry Analyst and Advisor Day, NIIT Technologies dove into the theme of helping clients leverage digital transformation agendas to move from “survive to thrive.” What we see of NIIT is the application of this same thinking to itself: NIIT realizes it needs to change in order to grow in this market. The traditional IT outsourcing market in which it grew its business is becoming more automated and application oriented. NIIT defined five tenets for change and is applying these points to itself and its clients:

1)    Think Customer

2)    Challenge Status Quo

3)    Unleash Ideas

4)    Improve Continuously

5)    Take Ownership

To make digital services relevant to its clients, NIIT is working to anchor its approach in defining “emotionally empathetic experiences”—the “Digital E3.” The point is to think about what a client’s customer wants to experience in a situation, such as Appropriate Returns in Investment Banking or Cared For in Insurance, and develop solutions to deliver it. It’s quite a change from thinking about delivering infrastructure management services from a purely IT perspective.  Bottom line: the Five Tenets and Digital E3 create a credible but yet unproven structure and focus for transformation from tactical IT to consumer-centric company.

NIIT is pursuing this strategy in its core businesses of application development and maintenance, infrastructure management, and business process management, and across the three industry groups that form the majority of its revenue: BFSI, Travel/Transportation, and Media, such as:

1. Developing a more empathetic culture: NIIT wants to define and deliver services based on desired experiences, becoming a true service-driven organization. We see this as an encouraging use of a design-centric approach to solve business problems. For example, NIIT used primary research with a client’s end users – warehouse operators – to understand why they hated the system it developed for them. While digitizing the warehouse management process using touchscreens mobilized and streamlined the work and was technically on target, it was awkward ergonomically for operators who wear large gloves.
2. Addressing automation proactively to position for long-term partnership: In one instance, a client told NIIT that it intended to automate as much as possible of the routine activities it outsourced. After the initial shock, the service provider came back with, “Automation is inevitable, so how can we help you do it?” NIIT is open to taking on risk and participating in this change that will shrink the footprint of current work, with the expectation that doing so can potentially position it for other, more value-adding activity. However, one challenge for NIIT and other service providers is actually being in line with their clients in defining and investing in these higher value services.
3. Using analytics to get closer to business: NIIT Technologies has developed a solution called Digital Foresight, which combines external data with internal data, applies behavioral models and targets specific outcomes in its key verticals. We saw an example of how it helped a wealth management client use insights to improve its customer acquisition strategies. Analytics is a powerful lever for NIIT to demonstrate its capabilities in executing digital strategy, and the key for it will be in gaining momentum with clients and in building out examples for other industry verticals quickly.

NIIT Technologies is in a decent spot in the industry overall – a mid-size IT service provider that is small enough to make meaningful course corrections to its business model as the industry changes, and from the messages HfS heard, willing to make those changes. But therein lies the challenge: today NIIT is a more of a niche provider than an industry leader. It’s unclear if it can ultimately thrive in the face of encroachment by larger competitors; we need to see more clarity of message and articulation of value to allow NIIT to expand or evolve beyond it’s niche at a more aggressive rate. And its business process management story is somewhat hidden behind the rhetoric around IT services. NIIT will need to work hard to define, differentiate, and staff itself to shift from being an industry follower in survival mode to a thriving leader and realize its vision of being “the first choice” services provider to its clients.