Dell today announced its deal to sell IT services business called Dell Services to NTT DATA for nearly $3 billion in cash.
The divestment of IT outsourcing business is happening at a time when Dell is in the process of completing its acquisition of EMC for nearly $67 billion.
Dell Services competes with IBM, Wipro, Infosys, TCS, Capgemini, Deloitte, among others.
John McCain, CEO of NTT DATA, will be heading the combined business. Dell Services has expertise in healthcare & life sciences, banking, financial services and insurance with a major presence in the US.
Dell Services has data centers in the U.S., U.K., and Australia, while the $100 billion NTT Group has 230 data centers around the globe.
Suresh Vaswani, president of Dell Services, will continue to head Dell Services reporting to Michael Dell, until the transaction closes.
Toshio Iwamoto, president and CEO of NTT DATA Corporation, said: “Welcoming Dell Services to NTT DATA is expected to strengthen our leadership position in the IT Services market and initiates an important business relationship with Dell.”
The strategy of Michael Dell, chairman and chief executive officer of Dell Inc., is to divest non-core business before completing the $60 billion deal with EMC.
According to Fitch Ratings, the deal between Dell and NTT Data Corp will help reduce approximately $50 billion of debt incurred to finance Dell’s $67 billion acquisition of EMC announced on October 13, 2015.
Earlier, Reuters reported that Dell was in talks with private equity firms for selling Quest Software, which offers information technology management, as well as SonicWall, an e-mail encryption and data security provider. Together, Quest and SonicWall could be worth up to $4 billion.
The move to sell Dell Services to NTT Data will allow U.S. computer maker Dell to slash some of the $43 billion in debt it is taking on to fund its pending cash-and-stock acquisition of data storage provider EMC, Reuters reported on Monday.
Dell’s IT services division, formerly known as Perot Systems, is a provider of technology consulting to hospitals and government departments. Founded in 1988 by former U.S. presidential candidate Ross Perot, it was acquired by Dell in 2009 for $3.9 billion.