GSDE Assignment NICT Case Rachit Pradhan - 2013PGPM039 Page 1

Indian Institute of Management, Indore (Mumbai Campus)

Case Analysis: To diversify or to consolidate: NICT at Crossroads
Growth Strategies for Developed and Emerging
Economies by S.Basu






Submitted By
Rachit Devendra Pradhan
2013PGPM039

GSDE Assignment NICT Case Rachit Pradhan - 2013PGPM039 Page 2

Question 1: Do you think NICT to take up PBI Offer?
Ans: NICT should go ahead with PBI offer due to following reasons:
a) A firm contract with PBI for NICT would mean an end to the project mode of variable earnings.
b) If NICT could manage to become the sole technology (along with infrastructure) partner of PBI,
then it might emerge, like Microsoft,at the core of banking services industry with near
monopoly over technology
c) NICT can leverage the relationship with one large client, which means harnessing scale
economies and emerging as a pan India organization from a localized player in a BIMARU state.
d) It would give NICT an opportunity to its CSC kiosks for the generation of an augmented stream
of fee based revenue that would stabilize its free cash flows
e) Risk involved in refusal as ending up this commercially respectful gesture would mean losing up
all subsequent opportunities for NICT to include PBI in its subsequent portfolio.
f) Strong opportunity for NICT to expands its current network .Also depending upon the contract
terms with PBI, it may think of diversifying into core banking services
g) The offer also fits nicely into the business model of NICT and is sustainable social intervention,
coupled with regular employment and pay for CSC VLEs.
h) If NICT refuses the proposal then PBI may completely bypass an engage with kiosks VLEs directly
which will severe franchisee links with NICT impacting its regular stream of income. PBI might
even create newer network systems which can be a threat to NICT as its current clients like SBI
and BoI may exhibit opportunistic behavior in future and shift to newly developed systems by
PBI.
i) This also opens up a chance for NICT to utilize PBIs presence in across remotest locations of
India. It can be used for deepest penetration into market and serving new customers
j) This would even serve as an end to end project mode of variable stream of earnings for NICT by
involving rural population via financial inclusion.


GSDE Assignment NICT Case Rachit Pradhan - 2013PGPM039 Page 3

Complacency within the ranks
and files of NICT
VLEs might become inefficient
and corrupt.
With the increased workload,
NICT might get constricted in
terms of portfolio
management.
No guarantee of PBI being a
success
PBI would likely to be
mandated to engage the rural
population with financial
inclusion.
PBI might bypass NICT and
engage the kiosk VLEs
directly, by providing them
resources to set up a
standardized compatible
network
Present collaborators of NICT
namely SBI and BOI, might
exhibit opportunistic
behaviour in future.

A sustainable social
intervention, coupled with
regular employment and pay
for the CSC VLEs.
Empower the rural population
through financial inclusion.
By leveraging the relationship
with one large client, NICT
might harness scale
economies and emerge as a
pan India organization.

Rejecting the PBI offer
essentially implied
maintaining the status quo
situation and enjoying the
fruits and repose of a
stabilized system.
Send a strong message to the
current collaborators that
NICT believed in stable
relationship.
Could deepen present ties and
bring in newer collaborators.
Rejection of the current RFP
would not necessarily exclude
NICT from future
engagements with PBI.

Accept Rejection

Core Analytical Framework
Advan
tages
Disad
vanta
ges
GSDE Assignment NICT Case Rachit Pradhan - 2013PGPM039 Page 4

Building Core
Competencies
Use of technology to provide
Banking Service through Kiosks
in rural India

Competency &
Capability based Scale
Economies
Sustainable Inclusive growth
through employment and
empowerment (CSCs and VLEs)
Core Analytical
Framework (shown
above)
Scope Economy Based
Diversification
Strategies
Not yet but possible with PBI
offer
Planning Based
Success
Financial Inclusion through
alliances with SBI &BoI



Five Pasteur Model

Question 2 : What are ramifications with respect to BoI and SBI if NICT takes up PBI offer?

Ans: Ramifications with respect to BoI and SBI in case NICT takes up the offer
a) PBI might force it to migrate into third party operating systems (OS) and procedures resulting in
organization wide unlearning and learning in rural setup, which had been a big competitive
advantage of NICT while serving ties with SBI and BoI.
b) When PBI mandates to engage the rural population via financial inclusion, and if NICT takes up
the project it sends strong signals that NICT will be serving SBIs prospective threat and rival in
rural market.
c) It may even severe ties with SBI and NICT may also loose future contracts from both SBI and BoI
as later banks might consider NICT incapable to serve multiple big clients simultaneously.
d) SBI contract had been a corollary to NICTs investment in CSC kiosks and directing entire
organizational efforts towards once contract may leave SBI unattended that leaves SBI with to
GSDE Assignment NICT Case Rachit Pradhan - 2013PGPM039 Page 5

look for alternative rural vendor that may severe impact NICT revenues from the franchisee
kiosks in rural India.
e) Taking a chance that may severe ties with its old alliances like SBI that helped NICT diversify into
core banking services and make its outsourced presence dominant in rural market, may affect
its reputation by sending signals to prospective alliances that NICT fails to respect and service
old business alliances.
f) Taking up this large project could be risky and may leave SBI and BoI unsatisfied as NICT may fail
to service properly its previously entered contracts s
g) If NICT takes up the PBI offer, efficient execution of the contracts might not necessarily result in
reciprocal payment releases and NICT as an organization was not willing to learn the tricks of the
trade in government projects. Its a double edged sword , PBI as well as SBI and BOI which would
have developed a negative attitude towards NICT till then.
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