Fujitsu Inks First Deal in North American Outsourcing Push

When you think of the major players in IT outsourcing and professional services in North America, IBM Global Services and EDS (now HP) typically come to mind. Now there’s a new player with a familiar name looking to break into the space: Fujitsu America.
After consolidating its business units last year, the well-known Japanese giant has set its sights on the IT outsourcing and managed services market, with its eye on North America. The effort is part of an overall strategy to draw revenue outside of Japan at levels equal to what it makes in the home country and to generate services-based sales on par with product sales, according to Jack Noble, executive vice president of IT services at Fujitsu America. The consolidated company is comprised of three groups: Fujitsu products, Fujitsu’s existing consulting around enterprise applications, and the new IT Services Group.

The services business launched on April 1 with two datacenters in operation. Last week the group added a third datacenter by signing its first IT outsourcing deal, a 10-year contract with Alliance Data, a midsized enterprise provider of loyalty and marketing solutions. The deal is estimated to value more than $40 million annually for Fujitsu, Noble said.

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Noble says demand is high for managed services and IT outsourcing, especially in this economy, and that customers are looking for alternatives too.

“What’s interesting to us is that since going public with our offerings, what we can do and our capabilities, we have had lots of inquiries and been included on many RFPs,” Noble said. “In three months, we have a pipeline exceeding $2 billion in value. It’s not all qualified, but the point is we are finding genuine interest.”

The Alliance Data deal came about after Noble’s team began targeting companies that, in light of economic conditions, wanted to fully concentrate on their core business and relieve themselves of the cost and time involved in running an IT organization. Starting July 1, Fujitsu America assumes the functions of Alliance Data Information Technology Services (ITS), which services Alliance Data business units along with five other existing clients. Noble’s team will also manage the existing Alliance Data Tier 3 datacenter, its assets and 180 of its personnel will join Fujitsu as employees.

The arrangement was part of Fujitsu’s strategy to grow quickly even though the company had few existing assets.

“In order to build this, we looked at opportunities selectively for deal-based acquisitions,” he said. “Assets plus business comes with that and that’s an immediate revenue stream.”