Mid-sized IT services firm NIIT Technologies reported a 35% year-on-year growth in its consolidated net profit at Rs 58.50 crore for the first quarter ended June 30, 2015 on the back of good performance in the US market. The $400 million mid-size IT firm has now set a goal to touch $1 billion in the next four years. Arvind Thakur, chief executive officer, NIIT Technologies Ltd speaks to T E Narasimhan about the company's plans. Edited excerpts:
What factors helped the company in Q1?
Mainly recovery in the US, which is a significant market for the company and growth in the BFSI sector.
US business grew by 7.7% (on a sequential basis), while international business grew by 8.9%, which helped maintain operating margins at 16.3% despite wage hikes.
Domestic business declined by 38%. There were challenges related to closing of deals and in collections. Execution challenges were impacting the margins. Hence, the company took a conscious decision to focus more on international and private business (in India). The main international markets for us include the US, Europe and now Middle East.
Does it mean that business from the government's side has also come down?
In the last 12-18 months, it has come down to 5% from around 13-14%.
How much does the international business contribute? What is your guidance?
Currently it contributes around 90% and it will grow further, can't put a number now. We are a $400 million company, our target is to become a $1 billion company in the next four years.
Where will the growth come from?
Both products and geographies.
Traditionally, NIIT's business was spread across application development and maintenance solutions, later it was spread to infrastructure management services which brought a good customer base across US, Europe, and Asia and it contributes (established as a separate BU last year) around 18% to our topline.
The company is deeply engaged with digital services (mobile platforms, analytics and cloud services), which is the future of business, and this includes SMAC and security. From 9%, this business has already grown to 14%.
There is a big opportunity for digital integration which involves integrating all new platforms into the legacy system. To strengthen operations further, we recently acquired Incessant Technologies (which adds BPM platform which the company lacked earlier).
Are you still open to acquisitions?
Typically, we do one acquisition in 18 months and this run rate will continue. Size is not a constrain, fit is more important in the direction we are going to build a big organisation.