Analyst Review - NIIT and Element K Consummate the Perfect
Marriage (Jul 06)
By Doug Harward, Founder and CEO of TrainingOutsourcing.com
Written exclusively for TrainingOutsourcing.com, July 2006
On July 27, global learning services provider NIIT, headquartered in
New Delhi, India announced that it had acquired Rochester, N.Y.
based Element K. Combined the companies will have more than
3,000 employees throughout the world with revenues in excess of US
$250 million. Instead of terming this an acquisition, I like to view it
more as the perfect marriage of two complementary organizations.
The union of the two companies has the ability to become one of the
most powerful companies in the corporate and educational
marketplace.
This is the second merger this year among "Top 20 Companies in the Training
Outsourcing Industry" and definitely the most significant in
terms of global reach. In June, ACS announced it was
acquiring Ernst and Young's Intellinex Learning Services
division. Although each deal has great importance to the
industry, the NIIT - Element K deal combines two companies with strong
international impact. NIIT has long been known for its content development and
learning technology capabilities with a strong presence
in India, China, Europe, and Africa, and a growing
presence in North America. Element K's prominence has
primarily been in North America through managed
services for e-learning and learning technologies. Their
KnowledgeHub TM solution has been well received along with their award winning suite
of over 3500 online courses.
Steve Hoffman, CEO of Element K, will continue to run the Element
K business out of Rochester. Steve states that "Element K will remain
an independent operating company. Customers will continue to work
with the same sales and service delivery personnel. NIIT customers
will benefit from having access to Element K's extensive catalogue of
e-learning and instructor-led courses as well as our hosted LMS
platform, KnowledgeHubTM."
According to Sapnesh Lalla, Senior Vice President of NIIT, "Element
K and NIIT have the collective experience and capabilities to deliver
best-in-class learning solutions that provide real business results. Our large
corporate customers will have access to unparalleled size, scale, and flexibility in
deploying experienced learning professionals to plan, design, implement, and rollout
large, global training solutions. Through our combined presence and established
reputation in 32 countries, we will provide global learning solutions with local
support. We are uniquely positioned to provide traditional "employee development
solutions" as well as "customer learning solutions."
I believe this deal also provides NIIT a much stronger U.S. marketing arm for its
Cognitive Arts subsidiary and custom content development service. Out of Chicago,
Cognitive Arts has had excellent success in the market but has not gained strong
brand recognition under the NIIT brand. Element K will be able to help leverage this
service and help it to become more recognized. Marketing and sales in the U.S. has
always been a strategic need for NIIT and Cognitive Arts. Element K should provide
the expertise and client list to help NIIT and Cognitive Arts to penetrate the US
market with their quality services.
Is this deal good for the overall training outsourcing market? Absolutely! Not only is
it good for each company, it is also good for the training outsourcing market and for
the consumer. It propels the collective organization into a truly premier international
services provider. It allows customers to get access to more leveraged content and
high technology related skills on a global basis. It provides customers with access to
'feet on the street' to deliver customer education services in virtually any market in
the world. And, it gives them another choice when an international player is needed.
It positions the collective NIIT - Element K Company as a new player who is truly
international and can compete with the Top 5 training companies in the world.
Buyers can trust that if they need a provider to deliver services anywhere in the
world, NIIT - Element K can do exactly that.
Will consolidation in the market continue? No doubt about it. In the next twelve
months, we will see at least two more mergers of companies with revenues in excess
of $100 million. The training marketplace is no longer made up of local Mom and Pop
companies. It's big business and growing in exponential proportion. I guarantee we
will see the creation of the industry's first $1 billion training company in the next two
years.
©2006 TrainingOutsourcing.com