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Growth Strategies for Developed and Emerging

CASE: To Diversify or to Consolidate: NICT at a Cross Roads

Submitted to :

Submitted By:

Prof. Shubhabrata Basu

PGP-2, Mumbai

1) Do you think NICT should take up PBI Offer?

Solution: According to me, NICT should take up PBI offer because of following reasons:

Business Model Fit: The PBI offer nicely fitted into business model of NICT aimed at
sustainable inclusive growth through employment and empowerment.

Sustainable social intervention: It would be a sustainable social intervention coupled with

regular employment and pay for the CSC VLEs.

Fit with the ideology of the company and Mukesh: Accepting the offer would empower the
rural population through financial inclusion which was well in lines with the ideology that
Mukesh and the company had worked on (to serve the society).

Fixed Source of Income and thus Stability: A firm contract with PBI would mean an end to
the project mode of variable earnings for NICT. A fixed source of income would always be
there to tide over difficult situations.

Harness Scale economies: By leveraging the relationship with one large client, NICT might
harness scale economies and emerge as a pan India organisation from a localised player in a
BIMARU state.

Possibility to emerge at the Core of Banking Service Industry: Along with Infrastructure
partner of PBI, the company might emerge at the core of banking services industry with near
monopoly over technology.

Possibility of PBI bypassing NICT if it rejects the offer: In the absence of NICT, PBI
might be forced to create substitute mechanisms to enter the market. It might altogether
bypass NICT and engage the kiosk VLEs directly, by providing them resources to set up a
standardized compatible network. That would be a severe blow to NICT as a large part of its
revenue was from the franchisee fees.

Possibility of SBI and BoI exhibiting opportunistic behaviour: The present collaborators
might exhibit such behaviour in near future or might even migrate to PBIs newly created
network using the public sector linkages.

These advantages are far stronger than the few disadvantages that might exist in accepting the offer;
hence, I would suggest that NICT should take up PBI offer.

2) What are ramifications with respect to SBI & BoI if it takes up PBI Offer?

Solution: The ramifications that exist with respect to SBI and BoI, if it takes up PBI offer are as

Possibility of PBI dictating terms: Being a bigger party, PBI might unduly dictate terms
against NICTs current clientele (SBI, BoI).

Disruption of the existing successful model: The present model of NICT with both SBI and
BoI was a successful one, a natural corollary to the investments in the rural sector through the
CSC model. Accepting PBI offer, might lead to disruption of this established as well as
successful model.

Operational Complexity: NICT will not be able to serve SBI and BoI with same efficiency as
their commitment will be high towards PBI. Also it is not possible for NICT to serve all Banks
at once with same level of quality due to resource constraint of being a relatively smaller firm.