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ICT margins to be held by Education Companies

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Cutting costs and aggressive bidding for government school contracts to maintain their margins, is being sought by the education IT providers, who are seeing margins in information and communication technology (ICT) business squeeze. The industry sources reported that longer time taken for execution of government school contracts and delays in getting approvals affect the margins of ICT players. Companies such as Educomp, Everonn and NIIT are looking to cut costs and lobby, with government intending to increase investments in education sector, for streamlining the disbursals process from the state governments to keep their operating margins in check.

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Educomp Solutions, the ICT business sector leader, is looking to reduce its focus on the low-margin and long pay cycle projects to help operational growth, according to an industry source. Educomp has about 14,500 schools in the ICT domain, which contribute about 20-30% to its sales. It plans to end the fiscal at 17,000 schools and is at various stages of negotiations for it. However, the Chennai-based Everonn Education said it is not looking to go slow on the ICT business even though maintaining margins on this business would be difficult. Everonn is expecting to increase its margins by its more profitable business of ViTELS.

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