The government technology and professional services market received a new layer to its mergers-and-acquisition landscape Monday upon the news that the system integration subsidiary of Tokyo-based Nippon Telegraph and Telephone will purchase Dell’s services business for $3.05 billion.
Through the deal, Dell’s federal government services business will combine with the similar unit inside NTT Data in a move executives at both organizations described to ExecutiveBiz as complementary and synergistic with similar customer sets and portfolio offerings for information technology and other professional services in the U.S. public sector.
NTT Data Public Sector President Tim Conway singled out the advisory and application innovation services his company provides agencies with Dell’s technology infrastructure, cloud computing and business process outsourcing as complementary pieces in the future combined business.
“It gives us the range to help our government clients in the race to digital conversion, navigating the cloud and addressing risk and compliance along the way,” Conway said in a call ExecutiveBiz jointly conducted with George Newstrom, president and general manager of Dell Services Federal Government.
“You have to have the contracting vehicles to get to the customers and there is an element of synergy both sides can bring together. We can jointly work on those to continue expansion into the customer bases that we both hold already.” Newstrom said.
NTT Data Federal Services and Dell Services Federal Government share prime positions on 13 government IT product and services vehicles such as Department of Homeland Security‘s EAGLE II, the National Institutes of Health‘s CIO-SP3 and the General Services Administration‘s Alliant and IT Schedule 70.
Both contractors also work with federal agencies on cloud and mobile computing initiatives, application management, information security and business process functions.
In total, the NTT conglomerate generates nearly one-fifth of its $14 billion total annual revenue in the global public sector market from agencies in the customs enforcement, criminal justice and defense segments.
“There’s a lot of lessons learned and global intellectual property and frameworks we have to leverage through our R&D investment,” Conway said.
“Our ability to leverage that (IP) and support our clients in the federal government can differentiate us from other pure-play companies in the space.”
For Newstrom, the cultural integration aspects of the impending combination is another appealing factor for both businesses and agency customers.
“The coming together of people that know the industry and our pure-play services professionals will complement both corporations and we can add much more capability for customers together when this thing is closed,” he said.