Demand soft across sectors, may look at new segments: NLSL CEO Lalla

As first announced in January 2022, the company became a separate entity after a demerger of NIIT Limited's corporate learning business in May this year

NIIT Learning Systems Limited (NLSL) is witnessing softness in demand across verticals with customers cutting down on discretionary spending amid a challenging macroeconomic environment.

The firm is looking at new market segments along with disproportionate investments in marketing and sales, its Executive Director and Chief Executive Officer Sapnesh Lalla told Business Standard.

“The business environment is challenging, to say the least. Most businesses or our customers see uncertainty in the environment and are hesitant to increase their spend on areas they believe are discretionary in nature. Education and training tends to be seen as an area that is discretionary,” Lalla said. 

First announced in January 2022, the company became a separate entity after the demerger of NIIT Limited’s corporate learning business in May this year.

NIIT Ltd now focuses on its skills and careers business, while NLSL helps global companies transform their learning ecosystems while increasing the business value of learning. 

Indian IT services and business process management companies are expected to post weak growth in the seasonally-strong period of the July-September quarter. This is mainly due to the slowdown in discretionary programmes of their clients in North American and European markets.

NLSL serves Fortune 1000 companies across North America and Europe. It has over 80 global customers across 30 countries.

“Our bet to disproportionately invest in sales and marketing is starting to see some results with respect to acceleration in new customers added. We are continuously looking at new market segments with both organic and inorganic investments.

If the past is a parameter, every time the economy starts coming out of recession, the propensity to outsource increases. We expect it to happen this time as well,” the CEO said.

He added, “For our business, we have seen softness not localised to any particular sector, but across most of the sectors we serve. Maybe an exception is the aerospace vertical because it is ramping up production in a significant way. We continue to believe that as we add new customers and as our existing customers start spending, we will start seeing growth.”

The company has recently made investments in new segments such as decarbonisation, where it expects to get a “first-mover advantage.” Apart from that, the new bets in the higher education area are likely to start creating some growth momentum. 

“As I look ahead, I feel generative artificial intelligence (GenAI) and other forms of AI will have a very significant role in training. They will have very significant use cases, which will improve the efficiency of training. The amount of investments we have made in research and development (R&D) as well as the number of people we have allocated to the problem, we seem to be the front runners. This is especially with respect to the managed training services industry. We will start seeing results in the next few quarters,” the CEO added.

However, he did not disclose the amount of investment NLSL has made in AI so far. The company has set aside a team of over 40 people to create new AI use cases.