Kaz Nishihata, CEO of NTT DATA, Inc., talks to Gernot Kapteina, Founder of OYSTEC, about his evolving role in the company's dynamic transformation, the key differentiators that set NTT DATA apart from its competitors, the importance of strategic partnerships, and his insights on the global economic landscape, along with its potential impact on NTT DATA's future.
It is nice to meet you again. We conducted an earlier interview in this format 2.5 years ago. Back then, you were SEVP in NTT DATA Corp. Japan and already responsible for 90,000 employees. A lot has happened in the meantime: You now hold the position of CEO at NTT DATA, Inc., leading a workforce of 150,000. Can you explain our readers about NTT DATA’s evolution and your changing role?
Nishihata-san: It is a pleasure to meet you again, and I am glad to share with you the journey of NTT DATA's evolution and my changing role within the company.
I became SEVP and Representative Director of NTT DATA Corp. in June 2020 to solve certain challenges faced by NTT DATA globally, specifically the difficulties integrating companies in Europe. As a solution, we successfully integrated NTT DATA EMEA and everis, resulting in the new NTT DATA EMEAL.
In parallel, we decided to streamline our US business, which was lagging a bit in the market due to the increasing demand for cloud and digital transformation services. This led to a restructuring initiative and the acquisition of additional companies in the digital sector.
Then in 2021, we introduced a brand integration and a new organization, which significantly boosted our business performance.
Later in 2022, we decided that NTT Ltd. and NTT DATA should combine their operations, as both companies had similar revenues but catered to different clients. This decision aimed to eliminate confusion among clients and focus on investment areas for growth outside Japan. As a result, NTT DATA, Inc. was launched in October 2022 as a new company with an expanded portfolio, integrating NTT Ltd.'s IT infrastructure & services, including data center, and network businesses.
In summary, NTT DATA has undergone significant transformations in the past few years, and my role has evolved alongside it. As the CEO of the newly formed NTT DATA, Inc., I am excited about our company's future and committed to driving innovation and growth for our clients worldwide.
What is the nature of this newly formed NTT DATA, Inc., and what unique selling points and distinguishing factors set it apart beyond those you have already mentioned?
Nishihata-san: NTT DATA, Inc. sets itself apart from its competitors in several unique ways. While we are among the top 10 IT service players globally, competing with US and Indian companies like Accenture and Deloitte, there are four key factors that distinguish us from others:
Firstly, there is our diverse portfolio: Our offerings extend beyond the realm of traditional IT services, encompassing robust IoT capabilities that span from edge devices to cloud and communication solutions. While some of our competitors are expanding their portfolios by acquiring network players, NTT DATA's current range of services is considerably broader and more comprehensive.
Secondly, it is about the DNA of NTT and NTT DATA: Our core values prioritize clients and people, ensuring that we always put their needs first.
Thirdly, you have to recognize our decentralized management system: We operate as the united companies of NTT DATA, Inc., recognizing the uniqueness of each region. We serve global players, the majority of our clients are local, and we prioritize respecting the needs of each country, aligning with our client-first, people-first approach.
And fourthly, we have a long-term mindset: We focus on long-term growth and do not react to short-term market changes. NTT DATA and NTT have a long midterm management plan, aiming for our target numbers by 2025. This approach allows us to continue investing in long-term growth.
In the short term, our growth may not be rapid, but our primary goal is to become a top player in the industry within the next 5 to 10 years. This long-term mindset, coupled with our unique selling points, sets NTT DATA, Inc. apart from the competition.
To support your growth journey, having strong partnerships can be important as well. How significantly does NTT DATA, Inc. engage in partnerships within the IT industry?
Nishihata-san: Partnerships are crucial for NTT DATA, Inc., as no single company can provide all the necessary services to clients in today's IT landscape. For instance, cloud partnerships have become increasingly important with the growing reliance on cloud-based services. And in specific areas, such as smart city initiatives, we recognize that no single company can satisfy all societal needs, which is why partnering with other companies is a vital part of our strategy.
One example is that we have a strong relationship with Microsoft, one of our key partners. This collaboration extends across several areas: Microsoft is a major client for our data center business, and we, in turn, utilize Microsoft Azure and other Microsoft software products.
Additionally, we have a tight relationship with SAP, as especially our NTT DATA Business Solutions unit maintains a strong partnership with them.
In summary, engaging in partnerships is a key component of NTT DATA, Inc.'s growth and success, as it enables us to provide a comprehensive range of services to our clients by collaborating with industry-leading partners.
Talking about Microsoft’s recent investment into OpenAI and considering NTT DATA's approach to AI technologies, does NTT DATA incorporate ChatGPT into their operations?
Nishihata-san: At NTT DATA, we are focusing on Generative AI/LLM, represented by ChatGPT, and have started using it in a wide range of areas, including various information extraction, use for question and answer, product recommendation to clients and modernization of clients' old systems. Meanwhile, the AI Governance Office has been established to effectively manage the risk of infringement of rights using AI and to promote the appropriate use of AI. The office started in Japan and plans to expand its activities outside of Japan in the future. While we don't directly utilize ChatGPT by our workforce, we indeed indirectly access its capabilities via our partnership with Microsoft and their suite of products. Furthermore, we utilize Microsoft's security offerings, highlighting the significance and versatility of our collaborative efforts in the IT industry.
How do you envision the future of NTT DATA, Inc., including its objectives, client demographics, and further focus?
Nishihata-san: In the future, we envision NTT DATA, Inc. strengthening its global presence, particularly in English-speaking countries like the US, through strategic mergers and acquisitions. Currently, we hold top 10 positions in several European and Asian countries, but we aim to expand our market share and industry reach further, focusing on sectors such as banking, manufacturing, healthcare, and public services. We also plan to invest in emerging areas like automobile manufacturing.
To achieve our long-term goals, we need to attract and motivate talented individuals by showcasing our success stories and continuous investment in innovation. As we unify our global and Japanese operations, we aim to create more synergy between our marketing, R&D, and other departments, leading to better collaboration and growth.
With our current status as an $18 billion company, we are in a strong position to acquire larger-scale companies, enabling us to further solidify our global portfolio and serve major clients worldwide. Our focus on innovation, recruitment, and strategic investments will drive NTT DATA's success and growth in the years to come.
How would you characterize your role, what drives your motivation, and how do you inspire others?
Nishihata-san: As my role has evolved over the years, I've transitioned from a more directive approach to a coaching mindset. I used to be nicknamed "Darth Kaz (Vader)", but as I've grown 'older and wiser', I have embraced the "Yoda Kaz" persona. With 150,000 members in our organization, it's important to remember our client-first and people-first values. I now focus on guiding and coaching our team members, who are the ones directly interacting with clients and society. My mission is to nurture and prepare the next generation of leaders, ensuring the continued success and growth of our $18 billion company.
Expanding respectfully our discussion beyond NTT, considering the larger context of the current state of the global economy: Seeing a rising inflation in global economies and the Bank of Japan's shift in interest rate strategy, what are the potential implications for both Japan and the worldwide economic landscape, and what are the impacts for NTT DATA?
Nishihata-san: The global economy is experiencing rising inflation, with some countries already in recession. The impact on NTT DATA depends on the clients' situation. Some clients facing recession accelerate their digital transformation, while others decrease their budgets. With US Hyperscalers cutting costs, we see an opportunity to recruit top talent worldwide. Despite potential challenges, it's a good time to hire skilled professionals.
During the COVID-19 pandemic, we saw an increase in remote work, especially in India and Eastern Europe, leading to even higher salaries and attrition rates. As competitors cut costs, it is an opportunity for us to retain and recruit talent.
Japan, currently lagging in digital transformation, is experiencing a surge in projects, and NTT DATA faces a lack of resources. Although Japan may face a recession, the demand for digital transformation is expected to continue for the next 2-3 years. This ongoing demand presents both challenges and opportunities for NTT DATA.
As we near the end of our interview, given your extensive leadership responsibilities across more than 50 countries, how much has the fading COVID situation allowed you to already increase your global travel to address the diverse needs of NTT DATA’s global Operating Companies?
Nishihata-san: With the COVID situation significantly improving, I have increased my international travels to better engage with our Operating Companies in various countries. This face-to-face interaction is essential for understanding their unique perspectives and nurturing stronger relationships. As we move forward, I am dedicated to maintaining this level of personal involvement to support the continued growth and success of NTT DATA, Inc. and its global clients and partners.
Kaz, thank you very much for this insightful interview!
Nishihata-san and Mr. Kapteina at NTT DATA, Inc. HQ in Tokyo, Japan, 2023
Notes: Interview Date was Friday, 2023.05.05 | Approval Date was Friday, 2023.05.12 | Today's Publication Date is Monday, 2023.05.15.
Link: NTT DATA Global Website
Copyright: NTT, NTT DATA, NTT DATA, Inc., NTT Ltd., NTT DATA Business Solutions, Microsoft, SAP, Accenture, Deloitte, OpenAI, DeepL and other company names, institutions and products mentioned are registered trademarks of the respective organizations and have been used in the creation of this interview.