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July 1, 2019updated 02 Jul 2019 10:18am

NTT’s $11 Billion Mega-Merger: London Chosen for Global HQ – What Now for Staff, Strategy?

"If you end up rationalising skills because of your head count number targets – which is not the case – then you end up losing really good skills, and go into a death-dive. That's not our culture and not what we're trying to do."

By CBR Staff Writer

NTT Corporation today kicked off the mega-merger of 28 of its companies with the creation of NTT Ltd. The new entity will bring together NTT Communications, Dimension Data, NTT Security, and 25 other companies in the Japanese multinational’s portfolio as one $11 billion business – to be headquartered in London.

The company will have a combined global workforce of over 40,000, and will invest over £200 million in UK tech and data centres. (The broader NTT Group holding group drives the majority of revenues from its global IP network and system integration services, which together generated more than 60 percent of operating revenues in fiscal 2018. It currently employs some 3,000-plus people in the UK.)

The creation of the new entity is the first in a four-stage pulling-together of the group’s businesses, with resourcing to be mapped out by October, and all affiliate companies to be brought under NTT Ltd.’s umbrella within approximately 36 months.

Prime Minister Theresa May said: “It’s fantastic that NTT Ltd. has chosen London for its global headquarters. A key part of our modern Industrial Strategy is to put the UK at the forefront of the tech and data revolution, and they will join many other world-leading companies who call Britain home”.

Introducing NTT Ltd. 

President and CEO for NTT Corporation, Jun Sawada said, “When we combine the new capabilities of NTT Ltd. along with NTT DATA, we create a top five global technology and business solutions provider with $20 billion revenues outside of Japan.”

NTT corporation

President and CEO for NTT Corporation, Jun Sawada

The CEO had announced the plans when publishing the company’s 2018 annual report, saying “We will… delegate a great deal of authority and responsibility to the global holding company in order to allow managers who are well acquainted with the global market to carry out management based on their own ideas.”

“This situation will result in managers who were previously only responsible for the interests of their own company being charged with responsibility for pursuing overall optimization as directors of the global holding company. I anticipate that this newfound responsibility will encourage more intimate coordination between Group companies.”

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NTT Ltd. will be led by Global CEO Jason Goodall, formally CEO of Dimension Data. He will work with fellow Dimension Data veteran Dave Sherriffs, who takes on the CFO role. They will be joined on the board of directors by NTT VC Founding Partner Vab Goel, NTT Group’s Senior Executive VP, ICT Infrastructure Services Masaaki Moribayashi, with the board chaired by Tsunehisa Okuno.

Impact on Staff: How Much “Rationalisation” Planned?

But what does the merger mean for staff – will rationalisation result in significant job losses? – and what’s the strategy moving forward?

Andrew Coulson, NTT Ltd. CEO, Europe, told Computer Business Review that growth, not cuts to reach a bottom line target, were the name of the game and gave a firm and direct “no” when asked if significant head count reduction was on the cards. The merger will happen in four stages, he noted.

“The first is today: that’s bringing together NTT Ltd. which is critical. That institutes a change in how the leadership runs NTT Ltd., so today we announced all the functional and services heads. That’s the first two bits.”

“Then on October 1 [we structure] the regionals, which is where the the majority of our 40,000 staff sit in terms of client execution, sales, pre-sales, solution architects, etc. We have another three months to map the target operating model that we’ve set ourselves as an organisation, and map the resources for the regionals. Then the fourth big tranche is bringing in the affiliates in the organisation; companies like Gyron, Arkidin, Secure 24… that will come over in the fourth tranche which is to be determined at a future date – but we’d like to see hit happen within a 24-36 month period.”

Pressed on mapping staff resources, post merger, Coulsen told Computer Business Review: “We’re not looking to make significant reductions.”

“We have to be cognizant of the fact that there is duplication internally, because we are bringing operating businesses together, but we are not looking to make massive reductions. I want to be very clear: the efficiency targets or growth targets we get are coming out of the go-to-market and bringing together of portfolio, as opposed to what you normally see in acquisitions, which is strip out the duplication to the nth degree and then bolt the go-to-market on top of it.”

“This is not an acquisition, it is bringing together the best of the best. The values are about growth, not to get to a bottom line number as quickly as we can at all costs, even if people get hurt. Our skill structure, the depth of our skills is one of the ways that we grow.”

“If you want to do crazy things and start rationalising skills because of your head count number targets – which is not the case – then you end up losing really good skills, and in a death-dive; people lose faith in you as an organisation and the skills you want to keep you end up losing; that’s absolutely not what we’re trying to do.”

What it Means for the Business

In a release published today, NTT Ltd. said that the merger will give:

  • Clients access to a more comprehensive range and greater depth of skills across multiple technologies and capabilities
  • Global technology and managed services that are world leading in scale and depth
  • Improved ability to deliver more in-depth industry solutions for our clients
  • World-class managed services platforms with the ability to deliver local customizations to meet clients’ needs in each market
  • Increased investment in innovation and R&D.

Andrew Coulsen told Computer Business Review: “The priority is to focus on where our clients are. We need to make sure that our staff understand what we’re trying to achieve and their role in that as we go forward so they can take ownership and be part of that journey.”

“The second thing is to make absolutely sure that we don’t complicate the model; that we have a sense of speed, without bureaucracy or anxiety of staff getting in the way, but that we’re deliberate in execution. That’s what we need to do over the next few months – and make absolutely sure that we don’t lose clients during this period.”

“Then making sure that we are developing our managed services platforms where we need to and focus on our client. Then the next evolution is what else do we then take to the market, using some of the R&D fund that we’ve got [over $3 billion], to make sure that we are actually driving the intelligent business of the clients: how they’re using their data; helping them use that data to change and enhance their business model, at the same time having core networking, core security tools [working] almost like you’re turning on the light switch.”

“We have time to deliver, the financial depth to go forward and make the investment we need to; we’ve got to be deliberate.”

“The Real Growth is Sitting in the NTT Security Area”

He added: “The real growth is sitting in the NTT Security area: standardising the platforms and the ways that we do analytics; the way that we do threat detection in a common way.”

“What that does for the client is give them a sense of understanding that this is a robust offering. A lot of clients want you take the risk away from them and understand that it’s repeatable, scalable and that there is a lot of understanding of how we are going to monitor and manage; whether that is the secure layer or network in its own right, particularly with impact of applications sitting on top of it – and obviously the network communications, the collaboration environment. The more you can give certainty around how that is going to operate, and how you are going to evolve that with new technologies, the more they are starting to consume that.”

The new company already partners with over 10,000 clients around the world including major financial services, pharmaceuticals, telecommunications, energy & utilities, manufacturing, automotive and technology sector companies.

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