NEC Australia set for profit return

NEC Australia is heading back towards profitability, after reporting two annual losses since taking on CSG Technology Solutions for AU$227 million in 2012, according to NEC Australia managing director Tetsuro Akagi.

NEC Australia managing director Tetsuro Akagi has said that he expects the company to return to profitability for the September quarter, after several quarters of net losses, driven by ongoing expenses associated with the AU$227 million acquisition of CSG Technology Solutions in 2012.

Akagi, who stepped into the company's national managing director role in January, expects the Japanese tech giant's Australian business to reach profitability in the September quarter.

The company's Australian business reported an AU$22.3 million net loss for the financial year ending March 2014, which was an improvement on the previous year's net loss of AU$33.6 million — from AU$327.1 million in revenue.

However, NEC Australia has won a spate of lucrative government contracts over the past several months, driving its revenue and providing the company with a springboard to further build its government work, which makes up about 60 to 70 percent of its Australian business, according to Akagi.

In early October, the company announced that it had won an initial three-year AU$69.8 million contract to manage, maintain, and support the central and local networks of all of South Australia's government agencies.

Over the past two years, the business also renewed a three-year managed services contract with the Department of Parliamentary Services; struck a five-year, AU$34.6 million deal with the Northern Territory's education department; and picked up three contracts with the Northern Territory government for network, voice, and desktop and server support management.

Trevor and Akagi
NEC Australia Northern Territory regional manager Trevor Oliver (L), and NEC Australia managing director Tetsuro Akagi (R) at the 52nd Australia-Japan Joint Business Conference, Darwin. Image: Leon Spencer/ZDNet

Akagi is already also looking further afield for revenue, indicating that he wants the company to move more into the logistics industry and healthcare, among other industry areas.

NEC Australia's fortunes have, somewhat counter-intuitively, soared with government budget cuts, according to Akagi. He said that government penny pinching generally works in NEC's favour, as state, federal, and local government entities outsource IT services in a bid to maximise their budgets and focus on their core businesses of government and official administration.

"Government tries to reduce costs. It's common," he told ZDNet. "But the Australian government and the Australian people are dynamic. If there are budget cuts, they outsource IT services to companies like NEC, in order to better focus on their core business. Most times, budget cuts are beneficial to us because of IT outsourcing."

Akagi's comments come as the company works to secure further biometric technology contracts with state and federal government entities. Akagi, along with Samsung's Northern Territory team, showed off the company's face-recognition system at the 52nd Australia-Japan Joint Business Conference in Darwin, from October 12-14.

Already, NEC Australia has secured biometric technology contracts with the likes of the South Australian Police , providing hundreds of Bluetooth-enabled mobile fingerprint scanners and an accompanying smartphone app, integrated with Australia's criminal database.

At the event in Darwin, the Northern Territory's chief minister Adam Giles reiterated NEC Australia's prominent position in the region's infrastructure, announcing a new online portal, iCentre, designed to streamline the IT support that the company provides for the territory's public and remote school network.

"NEC keeps our computers running and has just launched a new initiative called iCentre with the Department of Education to support technology in our schools," said Giles at the event.

Akagi said that Giles expressed an interest in the biometric technology when the NEC Australia team showed it to him at the event.

He also said that the South Australian government is now considering taking on the face-recognition technology, along with Australian immigration, border protection, and some corporate players, off the back of the success of the mobile fingerprint technology.

"Based on our track record here, we can expand in the other states, like South Australia and Western Australia. I think the governments exchange information on tenders and the companies involved," he said.

Leon Spencer travelled to Darwin as a guest of NEC Australia.