Sources: Dimension Data Continues Cost-Cutting Efforts, Eliminates Some Bonuses For Employees

Dimension Data is continuing to cut costs, with sources telling CRN the company has told some employees they would no longer receive their short-term incentive bonuses.

Sources said some of the company’s managers were recently notified of the changes to the short-term incentives. The incentives account for a significant portion of the financial compensation for a number of employees, sources said.

One source close to the company said the cutbacks have prompted multiple managers to leave the company. "It's a huge issue," said the source.

[Related: Sources: Dimension Data Layoffs Hit Across Multiple Departments]

Sponsored post

Dimension Data did not respond to multiple requests for comment.

The latest cutbacks come after a round of layoffs earlier this year and the sudden resignation of Dimension Data CEO Brett Dawson, who stepped down in June after 12 years at the company.

The layoffs earlier this year hit departments across the company including customer service, alliances, solutions engineers, sales and the managed services group.

Dimension Data, No. 11 on the 2016 CRN Solution Provider 500 list, has been looking to cut costs in recent months, as it is ’not generating a profit at this stage,’ according to parent company NTT CEO Jun Sawada on an earnings call in August. Sources said the company has also cut down on employee travel. Sawada said on the call that Dimension Data has been instructed to grow both its revenue and operating income.

NTT Data as a whole is seeing profitability drop 8 percent year over year to 58 billion yen although it said it expects to revise its forecasts in the fall when it completes its $3.1 billion acquisition of Dell’s Perot Systems IT services business.

Dimension Data had previously been pushing to aggressively drive up its sales, with a revenue target of $12 billion by 2018. To accomplish that, Dimension Data has been actively making acquisitions, including its 2014 blockbuster acquisition of Nexus, to nearly double its presence in the U.S. market and, more recently, acquiring Ceryx to strengthen its offerings around the Microsoft public cloud.

One source said the number acquisitions in the past year has resulted in significant position overlap, spurring a "realigning and readjusting of the business" to cut back on redundancies. Those efforts were echoed in the company’s most recent earnings call as a way for the parent company to improve its profitability. It is not yet clear how the acquisition of Perot Systems will impact Dimension Data and if any overlap will occur.

Those cuts haven’t been relegated to the U.S. business, with Grant Bodley, CEO of Dimension Data Middle East and Africa, saying the company ’continues to re-evaluate its structures to respond to changing market conditions and meet client requirements.’

"These changes are necessary to ensure we remove duplication, remain agile, relevant and continue to build a sustainable business going forward. Retrenchments are always a last resort, but may regrettably become a necessity as the company restructures to meet operational and business requirements,’ Bodley told South Africa-based publication ITWeb in August.

NTT made clear on its most recent earnings call in August that the focus on profits will continue for the company, as it said profitability continues to improve for the company overall, but it ’continues to work for the reduction of unprofitable projects in our group.’

’NTT Data will endeavor to grow sales in each region in order to increase the value of our global brand, while securing profits necessary for continually making investments and pursuing better business management efficiency,’ a translation of the company’s first quarter 2017 consolidated financial results said.

For its part, Dimension Data Americas ended 2015 with 26 percent organic sales growth, including 29 percent growth in the security business, 22 percent growth in the networking business and 19 percent growth in the data center business, Americas CEO Mark Slaga told CRN last fall.

"We are on track to triple the business," Slaga said at the time, referring to the U.S. business. "I feel really pleased and proud."