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Mcprogrammers McProgrammers Rajendra Pawar created a global chain of computer schools that churns out low-cost techies for call centers and software farms. That has made him a fortune -- and a folk hero. Business 2.0, July 14, 2004 By Om Malik Page 1 of 9 Crammed into a small classroom near a New Delhi shopping center, 20 of Rajendra Pawar's newest students peck at computer keyboards, pausing only to look up at a whiteboard full of abstruse equations and curious squiggles. The pupils are generally fresh-faced teens and young adults. Most come from families whose average annual income is less than $2,000. But these students figure to do considerably better than that themselves someday, which explains why they're so engrossed in today's subjects: the intricacies of creating applications for Microsoft's (MSFT) .Net and Oracle's (ORCL) high-end databases. It's a scene repeated daily in thousands of classrooms across India and other parts of the developing world. Pawar is the co-founder and chairman of the National Institute for Information Technology, a computer education company that since its creation in 1981 has quietly become a kind of giant global factory for Third World coders. NIIT has 3,430 schools that offer low- cost courses ranging from a three- month tutorial on basic programming languages to a three-year program covering some of the most advanced coding tricks in the game. The company operates in 42 countries. Its current total enrollment -- 500,000 -- makes it one of the largest educational institutions in the world. (The University of California's system, by comparison, has 204,000 students.) More than 3 million people have graduated from NIIT, and thousands of its alumni have held important, if often anonymous, posts grinding out code at global tech powers like Microsoft, Oracle, and SAP (SAP). More notably, NIIT has forged a special -- and controversial -- role in the era of outsourcing: Its graduates make up much of the staffs at call centers strung across India and the developing world. Its current total enrollment -- 500,000 -- makes it one of the largest educational institutions in the world. (The University of California's system, by comparison, has 204,000 students.) More than 3 million people have graduated from NIIT, and thousands of its alumni have held important, if often anonymous, posts grinding out code at global tech powers like Microsoft, Oracle, and SAP (SAP). More notably, NIIT has forged a special -- and controversial -- role in the era of outsourcing: Its graduates make up much of the staffs at call centers strung across India and the developing world. To some, that makes Pawar a bit of a villain -- the foremost operator of training camps for the job-devouring foot soldiers of outsourcing. Pawar is keenly aware of the sentiment. "Maybe I should get a bodyguard," he jokes. But he adds, "Somebody's got to run all these computers, and if our students can do it more efficiently than others, it's inevitable that they'll get hired to do it." Besides, the students in his schools and many others in the countries where NIIT operates are more apt to see Pawar as a hero: His classrooms are providing a path to economic opportunities that have never before existed. And many find inspiration in Pawar's own personal tale of entrepreneurial moxie. He started NIIT based on an idea that everybody told him would never work, flirted with financial ruin, and then came up with an ingenious business model that, once again, many doubted. Page 2 of 9 His secret sauce? Pawar decided to franchise NIIT's schools rather than own them. "McProgrammers," the approach has been called. Franchisees have spread NIIT everywhere from China to Ghana to Russia -- one reason NIIT was once valued at $2 billion on the Bombay Stock Exchange. The tech bust almost destroyed the company, but Pawar has weathered the storm. In its last reporting period, covering the 18 months that ended in March, NIIT earned $9.5 million on revenue of $323 million. Now Pawar has a new expansion plan, one that he hopes will cool the outsourcing furor: He wants to bring NIIT schools to America. That he tried it once before and failed dismally seems not to concern him in the least. In 1992, Gaja Krishna Vaidyanatha was a recent college grad training to be an accountant in the Indian city of Chennai. On his first job, he says, he stumbled onto a fraud at a government- controlled company. Krishna says company execs tried to bribe him with money and women. One night as he rode home, an auto ricksha rammed his motorcycle, almost causing him to crash. The next night it happened again. To Krishna, the message was clear. He decided to drop the audit and change careers. Krishna signed up for a three-month, $250 NIIT course in database programming and Lotus 1-2-3 and has never looked back. Now 35 and living in Silicon Valley, he has designed apps for numerous big-name firms, including Oracle and Veritas (VRTS). These days he's a software consultant, and his second book on database coding is about to be published. "NIIT gave me the launching pad for my whole career," he says. "And it might have kept me from getting bumped off in Chennai." Page 3 of 9 WHAT'S COOKING AT NIIT DOLLAR MENU CLASS WHAT YOU GET LENGTH COST Basic computing Swift Jyoti and Internet 18 hrs $17 browsing skills Web Designing Made Web-design skills 68 hrs $80 Easy COMBO MEALS CLASS WHAT YOU GET LENGTH COST Bachelor's degree in B.Sc. (IT) information 3 yrs $1,450 technology Advanced training GNIIT in software 3 yrs $1,850 engineering SIDES CLASS WHAT YOU GET LENGTH COST Network operation CATS SysAdmin and management 3 wks $725 skills Java programming J2EE Expert 12 wks $725 training Source: NIIT Krishna's story may be more colorful than those of most NIIT alums, but his success is typical of thousands of the company's graduates, and just the kind of upward mobility Pawar envisioned for students when he founded NIIT. The son of a senior Indian military officer, Pawar, now 53, studied electrical engineering at the demanding Indian Institute of Technology in New Delhi, where fellow alumni include the likes of venture capitalist Vinod Khosla and Pradeep Sindhu, founder of Juniper Page 4 of 9 Networks (JNPR). Unlike many of his buddies, Pawar didn't light out for America when he graduated in 1972. He eventually hooked up with Hindustan Computers, a pioneer on the Indian tech scene that built minicomputers. It was there that Pawar had his first important insight: "It dawned on me that even though we were making these machines, corporations didn't know how to use them, and there weren't enough skilled workers to take advantage of them." When his company's sales stalled for those very reasons, Pawar devised a training program to show corporate managers and employees how to use the minicomputers in their jobs. Sales picked up, and Pawar packed up. He roped in a longtime friend, Vijay K. Thadani (now CEO of NIIT), and set about trying to create a computer education empire. It was rough going. "We didn't have a clue how to run an academic institution," Pawar recalls. But some conditions in India worked in their favor. Every year more than 7 million kids attend the country's 12,600 colleges. For the hordes of graduates who study something other than computer science -- and in the early days of NIIT, they were the vast majority -- work is hard to find. Indeed, Indians derisively call nonengineering alums "ordinary graduates." Pawar saw them instead as a vast untapped pool of potential computer jocks. He and Thadani scraped together $40,000 and set up the first NIIT school in Mumbai (formerly called Bombay) in February 1982. The school opened with a single computer. Most of the course materials were dog- eared manuals and dated American training videos. Worse, even after the company advertised in local newspapers, "no one showed up," Pawar recalls. Eventually, someone did: a merchant seaman. He bailed after a few days. Gradually, however, word got out and enrollment began to pick up. But it didn't really take off until 1984, when Apple Computer (AAPL) introduced the Macintosh PC. The Mac became a sensation, in India as in much of the world, and students flocked to NIIT to learn about the wondrous new world of home computing. "I knew then that NIIT was an idea whose time had come," Pawar says. By the late '80s, NIIT had 25 schools and was profitable. Pawar was well on his way to becoming one of India's first tech megamillionaires. Trouble was brewing, however. NIIT's success spawned a wave of imitators that began undercutting its prices. Pawar suddenly found himself under siege, and in the late '80s, growth stalled. The countermeasure Pawar devised would prove to be his masterstroke. Page 5 of 9 OVER 3,000,000 SERVED NIIT's franchise model has allowed it to reach students in 33 countries. Source: NIIT Pawar knew he had to expand beyond his big-city base into smaller towns and rural India. In his wide travels, he had observed the relentless expansion of global chains - - McDonald's (MCD) advance through the developing world particularly caught his attention. Franchising, he could see, was a way to grow a business rapidly. After Page 6 of 9 months of pondering, he came up with a uniquely Indian twist on the model: He would try to get the most respected families in small communities to sign up as his franchisees.
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