India front and centre of NTT’s transformation under its first Indian CEO

When he assumes charge, Dubey will also become the first CEO of Indian origin to lead a Japanese group, joining the ranks of Satya Nadella, Sundar Pichai, Arvind Krishna, Shantanu Narayen, and Nikesh Arora, who head global technology companies Microsoft, Google, IBM, Adobe and Palo Alto Networks, respectively.

A little over two years ago, NTT Data Corp. merged the overseas business of NTT Inc. with the group’s overseas business–a move aimed at accelerating NTT Data’s global business growth outside Japan by increasing its global footprint.

“NTT Data is the $30-billion invisible company that is changing the world responsibly," the global CEO designate of the NTT Group told Mint in an interview during his recent visit to India.

Japan, according to Dubey, currently accounts for around $12 billion of the overall global revenue. NTT Data, he added, is now a “full-stack transformation company", which implies that it has all the tools “to transform the platforms of our clients’ infrastructure–data centers, cloud environments, networks, applications, data, etc.,–all the way to systems integration and managed services, with an advisory-led approach".

He clarified, though, that NTT Data does not consider itself a consulting firm but only an advisory, which “we do with a mix of humans and machines".

NTT Data’s $30-billion global revenue makes it one of the biggest IT services providers globally, slightly bigger than the $29-billion Tata Consultancy Services Ltd but much smaller than the $64-billion Accenture. 

Can’t hire fast enough

HFS Research, in a note on 7 February, said NTT Data “is acting now to radically overhaul its global go-to-market" by pooling all the services capabilities of the NTT Group outside Japan while embracing technology arbitrage. 

“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," HFS Research said.

NTT Data's workforce, according to Dubey, broadly falls under four categories—client-facing delivery side employees; software developers and consultants; and those managing client environments such as apps, infrastructure, or business processes. The fourth category comprises internal knowledge workers including those in finance, human resources, and those managing different business processes.

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“India is a big source of talent in the first three categories," Dubey said. “India will continue to be our biggest innovation and delivery hub, especially as we grow globally and expand into new areas like AI, etc.," he added. This, according to Dubey, implies that there will be “a lot of reskilling and upskilling" of talent since “we don't think that we can hire fast enough".

Doubling down on India

NTT Data’s India revenue was “somewhere between $500 million and $1 billion", Dubey told Mint last year. When asked about the current status, Dubey did not give any numbers but said, “We now have a much stronger portfolio in the India market, and we are doubling down on a few areas, specifically on applications."

He also sees a “significant market around the entire infrastructure modernization or setup, around AI clouds and generative AI", and anticipates private-sector adoption to pick up, along with the “digital applications and digital product development" markets in India.

Globally, the group is investing in next-generation networks such as private 5G (which, unlike public 5G networks, give businesses exclusive control over their data, security, and network management); in growing its data center capacity to power artificial intelligence (AI) clouds and software AI clouds of the future; in building its advisory and industry capabilities in different geographies; and in Generative AI, security, customer experience, and cloud. 

“Those will be the growth domains we will be focused on," Dubey said. 

Future-proofing

NTT Data is also future-proofing its businesses, and that of its clients, by adopting and implementing automation, AI, and GenAI. 

For instance, NTT Data has deployed an “intelligent billing engine" that recommends the next best action for whoever is involved in the process. This has led to a “15% decrease in unbilled invoices, 12-day reduction in lead time, and an 85% increase in on-time billing accuracy", Dubey said. 

The group also has a large language model (LLM)-based chatbot to help its employees leverage the “internal knowledge" of the group and has developed its own Japanese LLM, called Tsuzumi, which is being explored by healthcare companies and contact centers to begin with. 

NTT Data also has its own digital assistant called KITA, which it deployed globally across its employee base.

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For clients, NTT Data has built a platform called Accent++ “comprising a developer workbench for software coding, testing, etc; consultant workbench for consulting engagements with client; and an operator workbench for anybody who’s doing managed services, infrastructure applications, data, business processes, etc.," Dubey said.

NTT Data also recently co-developed a virtual digital assistant called Lore, with French cosmetics company L'Oréal. The GenAI-powered assistant recommends beauty products to customers based on their needs, guiding them to the brand’s online store or allowing them to shop directly within the app.

Big push on data centres

NTT Data, meanwhile, is continuing to invest in data centers. In 2021, it committed to invest $11 billion towards expanding or upgrading its data centres globally, till 2027. 

A year later, it announced investments of about $2 billion over five years towards building more data centres in India. The group currently has 18 data centres across Delhi-NCR, Mumbai, Chennai, and Bengaluru, spanning 3.1 million square feet.

The data center market was growing at 15-17%, much of it driven by digital consumers and the need for cloud computing services, according to Dubey. He believes AI will add “another five to seven percentage points of growth".

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According to Dubey, NTT Data will also continue to invest in hyperscale data centres (hyperscale data centres have at least 5,000 servers spread across more than 10,000 sq.ft., according to IDC). 

The NTT Group simultaneously is focusing on investing in ‘edge’ data centres too, which would be in tier-II cities. Edge computing is a technology that processes data closer to where it’s generated, such as on devices or local servers, rather than sending it to a central cloud. 

This reduces latency, speeds up response times, and saves bandwidth, making it efficient for applications needing real-time data processing such as smart devices, autonomous vehicles, and industrial automation.

But data centres are power guzzlers. To address this concern, about 35% of NTT Data’s global power consumption of data centers now comes from renewable sources. “We have committed to 100% renewable energy data centers by 2030," Dubey said.

Transformation in a stagnant market

All that said, the NTT Group’s transformation comes at a time when growth in the IT services market is stagnant, which spells “fierce competition and limited growth opportunities", HFS Research said in its note. 

This, 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 added.

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To expand its mindshare with Global 2000 enterprises outside Japan, NTT Data will have to make “significant investments in marketing that it historically had been shy to support", HFS Research said. 

It research firm added that NTT’s management must “ensure enterprises can easily understand and navigate its extensive capabilities, pulling together all the pieces into one clear offering".

If it fails to do so, HFS Research cautioned, “the newfound size and scale will become more of a hindrance than a growth driver".