Report: Dell Close To Deal To Sell IT Services Business To NTT Data

Dell is reportedly close to wrapping up a deal to sell its IT services business unit to NTT Data for about $3.5 billion.

Tuesday the website Re/code reported that NTT executives would meet with Dell CEO Michael Dell in New York on Wednesday to formalize the offer.

Sources told CRN on Feb. 16 that NTT Data had entered into an exclusive 30-day negotiating period with Dell, although at that point it was unclear how close the two companies were to a deal and at what price.

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Dell is in the process of acquiring storage system giant EMC and has been looking to sell the IT services business as a way to help pay down the $49.5 billion in debt Dell will take on as part of that acquisition. Dell is also trying to sell its Quest software business, which it bought in 2012, and its SonicWall security business.

Dell's IT services business unit consists largely of Perot Systems, the IT services company Dell bought in 2009 for $3.9 billion. Dell is said to have been initially seeking $5 billion for the business, but has had trouble finding a buyer at that price. Along with NTT Data, potential buyers originally included Tata Consultancy Services, Atos and Cognizant Technology Solutions, with some of those since dropping out of negotiations.

Dell Services was ranked at No. 9 on the CRN 2015 Solution Provider 500 list.

Dell has said that once the sale is complete, it expects to rely more on partners to provide systems implementation and other services to customers. That's resonating with channel partners.

"I think that the selling of the Dell IT Services division represents a terrific opportunity for partners, in that it should cause Dell to rely more on its partner community to deliver the services around the solutions," said Dan Serpico, CEO of FusionStorm, a San Francisco-based solution provider that partners with both Dell and EMC. "That creates more value-add and more profit opportunity for partners, without any potential conflict with Dell."

Serpico, in an email, said he had just chatted with Michael Dell at the VMware Leadership Summit in Scottsdale, Ariz., and noted how much the CEO is getting around and meeting with solution providers. He said the company overall is doing a good job of keeping partners informed about decisions relating to the EMC acquisition, such as last week's move to name several executives to key positions.

While Dell's channel program has "matured and evolved," Serpico said there have been challenges in migrating previously direct Dell customers over to Dell Partners. "The selling of [the IT services business] and the subsequent reliance on the partner community for services should help accelerate that transition by further clarifying the value that partners bring," he said.