In a bid to stay relevant, NTT DATA consolidates its global footprint

The IT services market continues to experience extremely challenging market conditions. In what HFS has named the Digital Dichotomy, organizations worldwide continue facing a slowdown through multiple macroeconomic headwinds and challenges such as inflation, recession fears, global conflicts, and supply chain disruptions assaulting their strategic goals. Simultaneously, they are in a big hurry to drive innovation to respond to those challenges and stay relevant. To avoid the fate of Kyndryl, Atos, DXC, and others, NTT DATA is acting now to radically overhaul its global go-to-market.

The company is pooling all the services capabilities of NTT Group outside Japan while embracing technology arbitrage. Entering the market in the second quarter of 2024, the new NTT DATA claims to boast an estimated revenue of $30 billion globally, $18 billion of which is generated outside of Japan, making it one of the biggest IT services providers globally, as shown in Exhibit 1.

Reminiscent of OneAccenture, the new proposition of OneNTT should pose a compelling opportunity for enterprises searching for a strategic partner to deliver their transformation projects. It is unique because it blends consulting, IT services, and business operations with the NTT’s vast communications capabilities.

Exhibit 1: NTT DATA’s reported $30 billion annual global revenue puts it in competition with the likes of Accenture, TCS, and Capgemini

Sample: HFS Research estimates and earnings reports of leading IT services providers
Source: HFS Research, 2024

NTT DATA’s transformation is coupled with fresh leadership and a strategy with AI at the core

NTT DATA’s transformation extends far beyond revenue numbers, as fresh leadership allows for a new approach to the company that embeds AI at the core. Abhijit Dubey is stepping into the CEO role for NTT DATA while Eric Clark takes the reigns as CEO of Americas.

Pulling together a 150,000-person-strong team, the revitalized NTT DATA will serve clients across EMEAL (Europe, Middle East, Africa, and Latin America), APAC (Asia Pacific), and North America—its three strategic markets. To achieve its goal of delivering on its key pillars of innovation, transformation, and optimization, NTT DATA is actively tweaking its portfolio of offerings to enhance the AI focus, which will culminate in the provider going to market through two main business units: Global Technology Services and Business Solutions

Through candid conversations with NTT DATA’s leading executives, we learned how the provider is already leveraging generative artificial intelligence (GenAI) within its organization, with plans to take the lessons learned to its enterprise clients. Executives outlined case studies covering sales, marketing, and employee experiences, highlighting a 30% to 35% productivity improvement in senior developers. Further demonstrating its commitment to AI, NTT DATA has developed its own Japanese large language model (LLM), tsuzumi, which it believes is lightweight, scalable, and will make the technology more affordable for enterprises. Its leaders advise the LLM is already being leveraged in a handful of healthcare settings and contact centers, and there are plans to expand it into other sectors in 2024.

NTT DATA’s heritage offers a differentiated proposition for enterprises

While many providers covered in Exhibit 1 are of Indian, European, or North American heritage, NTT DATA has a rich Japanese heritage, one of its key differentiators. The provider places an enhanced focus on long-term success rather than fulfilling short-term quarterly earnings quotas to drive shareholder confidence.

NTT DATA’s approach enables it to invest heavily in research and development, where it pledges roughly $3.5 billion annually. The substantial R&D funding should give enterprises confidence that should they choose NTT DATA, they have a partner that can deliver the latest and greatest solutions and offerings. It’s an increasingly tempting proposition when combined with the provider’s newfound scale and capabilities. Additionally, enterprises might find it’s less likely they will be pressured into rushed contractual commitments to help the provider hit earnings targets. Other notable differences include NTT DATA’s employee-first culture, which should drive improved service for enterprise clients, and commitment to building a sustainable future, which should be big green ticks for enterprises.

Embedding OneOffice™ in a $30 billion global IT services provider is no easy feat—particularly in a slow market

To adopt a truly OneOffice™ mindset, an organization must ensure alignment across the front, middle, and back offices and IT and business services. That alignment is easier said than done when assembling a $30 billion global behemoth. NTT DATA’s leadership must break down remaining silos and ensure enterprises can easily understand and navigate its extensive capabilities, pulling together all the pieces into one clear offering. If this isn’t done successfully, the newfound size and scale will become more of a hindrance than a growth driver.

Additionally, the transformation comes when growth in the wider IT services market is stagnant, which means competition is fierce and there are limited growth opportunities. The stagnant market, coupled with the fact that a large portion of NTT DATA’s revenue is still driven by legacy infrastructure offerings, means the pressure is on the provider to ensure the transformation is a success. It must then demonstrate the success to potential clients it hopes will commit to NTT DATA.

The Bottom Line: If NTT DATA executes its plan well, enterprises have an opportunity to capitalize on its differentiated capabilities and newfound scale.

To add relevance to scale, NTT DATA needs to expand its mindshare with Global 2000 enterprises. To do so will require significant investments in marketing that NTT DATA historically had been shy to support. It needs to convey its OneNTT aspirations and develop a more nuanced customer segmentation approach beyond industry, function, geography, and size considerations. “One-size-fits-all” does not work. Enterprises looking for an innovation-hungry partner with a unique value proposition, all backed by significant scale, should consider the new NTT DATA—but be wary of teething issues as it confirms its new $30 billion structure.