Fujitsu will keep Kaz headcount

Summary:Fujitsu Australia chief executive Rod Vawdrey today said the acquisition of Telstra's Kaz Group would not result in redundancies, however, the fate of senior management is yet to be decided.

Fujitsu Australia chief Rod Vawdrey (Credit: Fujitsu)

Fujitsu Australia chief executive Rod Vawdrey today said the acquisition of Telstra's Kaz Group would not result in redundancies, however, the fate of senior management is yet to be decided.

The proposed $200 million acquisition of Kaz will add some 1,400 to Fujitsu Australia's current headcount of 3,500, Vawdrey told ZDNet.com.au this morning, bringing its local workforce close to 5,000.

The combined annual revenues expected as a result of the acquisition would be around $1.1 billion to $1.2 billion, he said. Fujitsu Australia's revenues last year were around $800 million, according to Vawdrey.

Key clients Fujitsu stands to inherit from Kaz include the sometimes troubled $200 million desktop support deal with the Department of Defence, Australia Post and petroleum giant BP.

Between 2007 and 2008, Kaz had also provided Centrelink with IT contractors and Microsoft software licensing; however, the value of the work at less than $1 million was substantially less than the $22 million it earned from Centrelink between 2005 and 2006.

Other clients it will inherit include ING Australia, which in 2010 will hit the end of a five-year infrastructure management deal, and a five-year deal with Royal Australian Navy due to expire in 2011.

The buy significantly changes Fujitsu's client profile, with the Japanese-owned company previously having a limited presence in the Federal Government. Fujitsu's customers have traditionally been from the corporate sector and state government agencies, such as the services contract it holds with the NSW Roads and Traffic Authority and project work it has done with the Western Australian Police.

"The acquisition will give us tremendous coverage in the market and strengthen some areas that we weren't as strong as we'd like to be," said Vawdrey.

Redundancies were not expected to result from the deal, said Vawdrey, though the fate of senior management has yet to be decided. "There are no plans to reduce staffing levels. We're buying customers and people essentially," he said. "The senior management team at Kaz Group will be working closely with Fujitsu over coming months to ensure a smooth integration of the two businesses."

Vawdrey said a key part of the transaction with Telstra was that Fujitsu would retain a "key strategic alliance" with the telco to partner with it on future IT services deals.

Telstra has remained relatively quiet on the sale. The telco had acquired Kaz in 2004 for $333 million, and in 2007 had sold its business process outsourcing division to Fuji Xerox for an undisclosed sum, which involved the transfer of just 120 Kaz staff.

After a long-running attempt to flog Kaz's remaining assets, with CSC and Fujistu Australia the likely buyers, Telstra last year took it off the market.

Today's transaction, in conjunction with the 2006 sale of Kaz's superannuation business, Australian Administration Services, for $215 million, means Telstra has sold Kaz for more than it bought the company for.

"The sale of Kaz provides Telstra with an attractive return for a business where its ownership was no longer considered a core part of TE&G's strategy," a Telstra spokesperson said.

"An essential component of this acquisition is the people and their skills. Mike Foster will assist with Fujitsu during the transition period and we will look at the future in due course. No firm plans have been developed to date," they added.

Topics: Telcos, Government, Government : AU, Outsourcing, Tech Industry, Telstra

About

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, s... Full Bio

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