India-based National Institute of Information Technology (NIIT) said its board has approved the proposal to split the business, and it will announce the timetable of the spin-off in the next few months. The services arm, called its Global Solutions business, will be renamed NIIT Technologies Ltd.
The businesses already operate separately – the company splits the two in its accounting reports – except for the Knowledge Solutions Practice, which looks likely to be transferred from Global Solutions to its Global Learning business.
This unit, which offers knowledge management and e-learning services, includes the recently acquired Cognitive Arts (bought in February for an undisclosed sum) and the custom development software business of Click2learn that it bought in January 2003.
NIIT has been unusually acquisitive for an Indian IT services company, buying SAP services firm Osprey Systems in April 2002, Data Executives International in October 2002, and AD Solutions AG the following month.
The Global Solutions business accounts for 53% of revenue as reported in its latest quarterly results, which revealed impressive growth in both parts of the company, and signaled a return to form after a period of restructuring.
For the three months to the end of September, the company reported consolidated revenue of $59.9 million up from $53.6 million a year ago. Net profit was $840,000 compared to a loss of $1.1 million last year. Its Global Solutions business increased revenue by 25% on the same period a year ago, and 11% sequentially, with its learning business growing by 2% on a year ago, and 24% sequentially.
The services business gained orders of $42.3 million during the quarter including a $20 million order in the insurance sector, giving it a total pending order book of $125.7 million. It will now expand its capacity in Delhi, Kolkata and Bangalore in order to support its increased growth.
NIIT was formed in 1981 as the internal IT training division of conglomerate HCL Ltd, and was spun off in 1993, launching on the Mumbai Stock Exchange. The company then shifted its focus to include software and services competing directly with its former parent.
More recently the company has struggled to compete against some of its larger rivals, which have been winning market share as billing rates decline.
The company went through a restructuring process in 2002, cutting jobs, and changing strategy to concentrate on three vertical markets: financial services, retail and transport. It also made a string of acquisitions.
The latest results indicate that the changes appear to be paying off, and following the results and spin-off announcements, its share price rose 10% on the Mumbai Stock Exchange.
This article was based on material originally published by ComputerWire.
